Symantec Corporation reports 1,174% Net Income growth in 2018 and 20.3% Revenue growth
05/10/2018 • About Symantec Corporation (
$SYMC) • By InTwits
Symantec Corporation reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Symantec Corporation motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 was 6.9% while average EBITDA Margin was 13.9% for the sames years. In FY2018 SBC/Revenue was even higher: 12.6%
- Symantec Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.9%. At the same time it's a lot of higher than industry average of 3.1%.
- CAPEX is quite volatile: $142m in FY2018, $70m in FY2017, $272m in FY2016, $303m in FY2015, $194m in FY2014
- In the last 5 years the company invested considerably less than D&A: $981m vs. $2,158m. In FY2018 this situation was still the same: CAPEX was 142 while D&A was 640
- The company has potentially unprofitable business model: ROIC is 0.4%
- It operates with high leverage: Net Debt/EBITDA is 4.7x while industry average is -1.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 20.3%. Revenue growth showed slowdown in FY18Q4 - it was 8.5% YoY. Revenue decline was slowing down on average by 13.6 pp per annum in the last 5 years. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 7.4 pp from 23.1% to 30.6% in 2018.
Gross Margin showed almost no change in FY2018. During FY2014-FY2018 Gross Margin topped in FY2016 at 82.9% and was declining since that time. SG&A as a % of Revenue decreased on 5.5 pp from 50.3% to 44.8% in FY2018. Stock Based Compensation (SBC) as a % of Revenue increased slightly on 1.7 pp from 10.9% to 12.6% in FY2018. SBC as a % of Revenue followed a growing trend at 2.9 pp per annum in the last 5 years.
Net Income margin jumped on 26.2 pp from -2.6% to 23.5% in FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 the company had CAPEX/Revenue of 2.9%. The company's CAPEX/Revenue decreased on 4.7 pp from 7.7% in FY2015 to 2.9% in FY2018. Average CAPEX/Revenue for the last three years was 4.1%.
Accounts receivable as a % of Revenue increased slightly on 0.59 pp from 16.1% to 16.7% in FY2018. Accounts payable as a % of Revenue decreased on 4.8 pp from 21.1% to 16.3% in FY2018.
Symantec Corporation has spent
$401m on M&A in FY2018 which accounts for 8.3% of revenue.
Return on investment
The company operates at good ROE (26.7%) while ROIC is low (0.4%). ROIC increased slightly on 1.3 pp from -0.90% to 0.40% in FY2018. ROE jumped on 29.7 pp from -3.0% to 26.7% in FY2018.
Leverage (Debt)
Company's Net Debt / EBITDA is 4.7x and Debt / EBITDA is 7.3x. Net Debt / EBITDA dropped on 5.3x from 10.0x to 4.7x in FY2018. Debt dropped on 38.6% while cash dropped on 58.2%.
Symantec Corporation has questionable short term financial stability: Interest coverage ratio (ICR) is only 0.2x. The company has no short term refinancing risk: short term debt is zero.
Average interest expence charged on company's debt was 5.1% in FY2018.
Valuation and dividends
The company's trades at EV/EBITDA 24.8x and P/E 12.2x.
The company paid 18.5% of Net Income as dividends in FY2018. Dividends grew on average at -12.8% per annum in the last 5 years).
Management team
Richard S Hill "Rick" is a the company's CEO. Richard S Hill "Rick" is a founder and has spent 7 years with the company. CEO total compensation was
$17,347,581 in FY2018 which included
$1,000,000 salary.
The company has 1.1% shares owned by insiders. Insider ownership didn't change in 2018.
The company has 11,800 employees. The number of employees dropped on 10.7%. Average revenue per employee in FY2018 was
$409,661 and it jumped on 34.7%.
Financial and operational results
FY ended 03/30/2018
Symantec Corporation ($SYMC) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 4,183 | 3,956 | 3,600 | 4,019 | 4,834 | 20.3% |
| Gross Profit | 3,392 | 3,229 | 2,985 | 3,166 | 3,802 | 20.1% |
| SG&A | 2,186 | 2,012 | 1,587 | 2,023 | 2,167 | 7.1% |
| EBITDA | 511 | 509 | 761 | 392 | 689 | 75.8% |
| EBIT | 144 | 154 | 457 | -100 | 49 | |
| Interest expence | 84 | 78 | 75 | 208 | 256 | 23.1% |
| Tax | 16 | -8 | 1,213 | -26 | -690 | |
| Net Income | 898 | 878 | 2,488 | -106 | 1,138 | |
| Stock Based Compensation | 88 | 131 | 161 | 440 | 610 | 38.6% |
Balance Sheet
|
|---|
| Cash | 3,707 | 2,843 | 5,983 | 4,247 | 1,774 | -58.2% |
| Accounts Receivable | 1,007 | 700 | 556 | 649 | 809 | 24.7% |
| Inventory | 14 | | | | | |
| Accounts Payable | 282 | 169 | 175 | 180 | 168 | -6.7% |
| Short Term Debt | 0 | 350 | 0 | 1,310 | 0 | -100.0% |
| Long Term Debt | 2,095 | 1,746 | 2,207 | 6,876 | 5,026 | -26.9% |
Cash flow
|
|---|
| Capex | 194 | 303 | 272 | 70 | 142 | 102.9% |
| Dividends | 418 | 413 | 3,030 | 222 | 211 | -5.0% |
| Acquisitions | 17 | 39 | 4 | 6,736 | 401 | -94.0% |
Ratios
|
|---|
| Revenue growth | -39.4% | -5.4% | -9.0% | 11.6% | 20.3% | |
| EBITDA growth | -70.7% | -0.4% | 49.5% | -48.5% | 75.8% | |
|
|---|
| Gross Margin | 81.1% | 81.6% | 82.9% | 78.8% | 78.7% | -0.1% |
| EBITDA Margin | 12.2% | 12.9% | 21.1% | 9.8% | 14.3% | 4.5% |
| EBIT Margin | 3.4% | 3.9% | 12.7% | -2.5% | 1.0% | 3.5% |
| SG&A, % of revenue | 52.3% | 50.9% | 44.1% | 50.3% | 44.8% | -5.5% |
| SBC, % of revenue | 2.1% | 3.3% | 4.5% | 10.9% | 12.6% | 1.7% |
| Net Income Margin | 21.5% | 22.2% | 69.1% | -2.6% | 23.5% | 26.2% |
| CAPEX, % of revenue | 4.6% | 7.7% | 7.6% | 1.7% | 2.9% | 1.2% |
|
|---|
| ROIC | 1.7% | 1.9% | 5.6% | -0.9% | 0.4% | 1.3% |
| ROE | 16.0% | 15.0% | 51.8% | -3.0% | 26.7% | 29.7% |
| Net Debt/EBITDA | -3.2x | -1.5x | -5.0x | 10.0x | 4.7x | -5.3x |
| Interest coverage ratio (ICR) | 1.7x | 2.0x | 6.1x | | 0.2x |
| Interest expence / Average debt | 4.0% | 3.7% | 3.5% | 4.0% | 5.1% | 1.1% |
People
|
|---|
| Insider ownership | 1.1% | 1.1% | 1.1% | 1.1% | 1.1% | 0.0% |
| Employees | 20,800 | 19,000 | 11,000 | 13,214 | 11,800 | -10.7% |
| Revenue/Employee, th. $ | 201 | 208 | 327 | 304 | 410 | 34.7% |
Symantec Corporation ($SYMC) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 1,175 | 1,240 | 1,209 | 1,210 | | 32.9% | 26.7% | 16.1% | 8.5% |
| EBITDA | 147 | 352 | 622 | 161 | | -17.4% | 190.9% | 360.7% | |
| Net Income | -133 | -12 | 1,342 | -59 | | -198.5% | | 2,817.4% | |
Balance Sheet
|
|---|
| Cash | 2,306 | 1,826 | 2,142 | 1,774 | | -62.2% | -67.5% | -61.6% | -58.2% |
| Short Term Debt | 0 | 130 | 0 | 0 | | -100.0% | -78.3% | -100.0% | -100.0% |
| Long Term Debt | 6,202 | 6,079 | 5,587 | 5,026 | | 138.1% | -7.6% | -12.1% | -26.9% |
Ratios
|
|---|
| Gross Margin | 78.1% | 78.9% | 79.4% | 78.2% | | -5.0% | 0.3% | 2.0% | 1.4% |
| EBITDA Margin | 12.5% | 28.4% | 51.4% | 13.3% | | -7.6% | 16.0% | 38.5% | 17.1% |
| Net Income Margin | -11.3% | -1.0% | 111.0% | -4.9% | | -26.6% | 13.7% | 106.6% | 7.9% |
Peers in Systems Software
Below you can find Symantec Corporation benchmarking vs. other companies in Systems Software 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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Advantego Corp ($ADGO) | | | | | 973.8% |
| Solbright Group Inc ($SBRT) | | | 286.4% | 25.4% | 414.0% |
| Duos Technologies Group Inc ($DUOT) | | 61.0% | -9.8% | -36.4% | 210.2% |
| Dell Technologies Inc. ($DVMT) | | | | | 145.7% |
| Finjan Holdings, Inc. ($FNJN) | | -6.2% | 292.3% | 174.6% | 63.0% |
| |
|---|
| Median (48 companies) | | 20.6% | 14.7% | 16.6% | 19.1% |
|---|
| Symantec Corporation ($SYMC) | | -5.4% | -9.0% | 11.6% | 20.3% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| StrikeForce Technologies Inc ($SFOR) | 97.0% | 96.9% | 98.3% | 95.4% | 94.0% |
| Varonis Systems, Inc. ($VRNS) | 90.2% | 90.6% | 90.5% | 90.4% | 89.8% |
| Check Point Software Technologies Ltd. ($CHKP) | 88.2% | 88.5% | 88.5% | 88.6% | 89.6% |
| Tableau Software, Inc. ($DATA) | 91.0% | 88.7% | 88.0% | 87.1% | 87.7% |
| Attunity Ltd. ($ATTU) | 90.7% | 84.9% | 83.9% | 84.1% | 87.5% |
| |
|---|
| Median (53 companies) | 76.1% | 74.5% | 73.1% | 73.9% | 73.5% |
|---|
| Symantec Corporation ($SYMC) | 81.1% | 81.6% | 82.9% | 78.8% | 78.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Check Point Software Technologies Ltd. ($CHKP) | 54.3% | 52.4% | 49.8% | 50.7% | 48.8% |
| SolarWinds Corporation ($SWI) | | | -8.0% | 44.0% | 44.8% |
| Finjan Holdings, Inc. ($FNJN) | -192.1% | -295.2% | 2.2% | 30.2% | 42.0% |
| Oracle Corporation ($ORCL) | 46.2% | 43.8% | 40.8% | 40.2% | 40.8% |
| CA Inc. ($CA) | 33.9% | 36.7% | 37.2% | 36.1% | 35.3% |
| |
|---|
| Median (47 companies) | -2.4% | -6.6% | -9.8% | -5.4% | -4.7% |
|---|
| Symantec Corporation ($SYMC) | 12.2% | 12.9% | 21.1% | 9.8% | 14.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| The Rubicon Project, Inc. ($RUBI) | 15.6% | 11.4% | 12.0% | 26.0% | 16.0% |
| CYREN Ltd. ($CYRN) | 2.4% | 4.4% | 3.2% | 5.8% | 9.2% |
| ServiceNow, Inc. ($NOW) | 8.0% | 8.7% | 7.6% | 7.8% | 8.6% |
| Qualys, Inc. ($QLYS) | 10.4% | 12.2% | 11.7% | 16.4% | 8.2% |
| Zscaler, Inc. ($ZS) | | 12.5% | 7.8% | 6.5% | 8.0% |
| |
|---|
| Median (48 companies) | 2.7% | 2.1% | 2.0% | 2.4% | 2.5% |
|---|
| Symantec Corporation ($SYMC) | 4.6% | 7.7% | 7.6% | 1.7% | 2.9% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Finjan Holdings, Inc. ($FNJN) | -42.6% | -113.5% | 3.4% | 46.6% | 64.1% |
| Fortinet, Inc. ($FTNT) | 9.2% | 2.1% | 5.3% | 15.0% | 28.0% |
| Check Point Software Technologies Ltd. ($CHKP) | 22.2% | 23.7% | 24.7% | 26.8% | 25.5% |
| MAM Software Group, Inc. ($MAMS) | 13.3% | 19.3% | 21.1% | 24.2% | 25.2% |
| Red Hat, Inc. ($RHT) | 15.1% | 14.1% | 14.2% | 16.4% | 22.4% |
| |
|---|
| Median (56 companies) | 0.0% | 0.0% | -4.3% | -4.7% | -1.9% |
|---|
| Symantec Corporation ($SYMC) | 1.7% | 1.9% | 5.6% | -0.9% | 0.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| NXT-ID Inc. ($NXTD) | | | | | 9.7x |
| SolarWinds Corporation ($SWI) | | | | 6.2x | 4.1x |
| Oracle Corporation ($ORCL) | 0.4x | 1.2x | 1.6x | 2.4x | 2.4x |
| ServiceNow, Inc. ($NOW) | | | | 9.0x | 0.9x |
| MAM Software Group, Inc. ($MAMS) | -2.0x | -1.5x | 2.1x | 1.4x | 0.4x |
| |
|---|
| Median (22 companies) | -2.1x | -1.4x | -1.0x | -0.8x | -0.5x |
|---|
| Symantec Corporation ($SYMC) | -3.2x | -1.5x | -5.0x | 10.0x | 4.7x |
