Luxoft Holding, Inc. revenue jumped on 15.4% while EBITDA Margin decreased slightly on 1.6 pp from 12.9% to 11.3%
05/24/2018 • About Luxoft Holding, Inc. (
$LXFT) • By InTwits
Luxoft Holding, Inc. reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Luxoft Holding, Inc. is a fast growth stock: FY2018 revenue growth was 15.4%, 5 year revenue CAGR was 23.6% at FY2018 ROIC 13.0%
- EBITDA Margin is declining: 11.3% in FY2018 vs. 12.9% in FY2017 vs. 18.1% in FY2014
- Luxoft Holding, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.9%. At the same time it's in pair with industry average of 3.6%
- CAPEX is quite volatile: $7m in FY2018, $3m in FY2017, $6m in FY2016, $9m in FY2015, $12m in FY2014
- The company has highly profitable business model: ROIC is 13.0%
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 15.4%. Revenue growth showed small slowdown in FY18Q4 - it was 14.1% YoY. Revenue decline was accelerating on average at -3.2 pp per annum in FY2014-FY2018. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 4.3 pp from 28.6% to 32.9% in FY2018. EBITDA Margin declined at -1.9 pp per annum in the last 5 years.
Gross Margin decreased on 2.2 pp from 39.5% to 37.4% in FY2018. Gross Margin declined at -1.4 pp per annum in the last 5 years. SG&A as a % of Revenue decreased slightly on 0.60 pp from 27.2% to 26.6% in FY2018. SG&A as a % of Revenue stuck to a growing trend at 0.95 pp per annum in the last 5 years.
Net Income margin decreased slightly on 1.7 pp from 8.0% to 6.3% in FY2018. Net Income margin followed a declining trend at -1.7 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
Luxoft Holding, Inc.'s CAPEX/Revenue was 2.3% in FY2018. The company showed almost no change in CAPEX/Revenue from FY2015 to FY2018. Average CAPEX/Revenue for the last three years was 2.8%.
Return on investment
The company operates at good ROIC (13.0%) and ROE (13.3%). ROIC decreased on 4.8 pp from 17.8% to 13.0% in FY2018. ROE decreased on 4.9 pp from 18.2% to 13.3% in FY2018. ROIC followed a declining trend at -7.3 pp per annum in FY2014-FY2018. ROE declined at -7.3 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.0x and Debt / EBITDA is 0.0x. Debt surged on 35.2% while cash decreased on 4.7%.
Luxoft Holding, Inc. has no short term refinancing risk: cash is higher than short term debt (12,191.2%).
Valuation and dividends
Luxoft Holding, Inc.'s trades at EV/EBITDA 6.7x and P/E 13.9x.
Financial and operational results
FY ended 03/31/2018
Luxoft Holding, Inc. ($LXFT) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 398.3 | 520.5 | 650.8 | 785.6 | 906.8 | 15.4% |
| Gross Profit | 168.8 | 226.6 | 271.4 | 310.6 | 338.9 | 9.1% |
| SG&A | 93.0 | 125.8 | 171.7 | 213.7 | 241.2 | 12.9% |
| EBITDA | 71.9 | 96.5 | 102.2 | 101.6 | 102.8 | 1.1% |
| Net Income | 51.2 | 63.1 | 70.3 | 62.6 | 57.0 | -9.0% |
Balance Sheet
|
|---|
| Cash | 37.5 | 45.6 | 108.5 | 109.6 | 104.4 | -4.7% |
| Short Term Debt | 20.5 | 1.3 | 0.5 | 0.6 | 0.9 | 35.2% |
| Long Term Debt | 0.1 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 13.8 | 14.2 | 24.2 | 19.6 | 20.6 | 5.0% |
Ratios
|
|---|
| Revenue growth | 26.6% | 30.7% | 25.0% | 20.7% | 15.4% | |
| EBITDA growth | 38.0% | 34.1% | 6.0% | -0.6% | 1.1% | |
|
|---|
| Gross Margin | 42.4% | 43.5% | 41.7% | 39.5% | 37.4% | -2.2% |
| EBITDA Margin | 18.1% | 18.5% | 15.7% | 12.9% | 11.3% | -1.6% |
| SG&A, % of revenue | 23.4% | 24.2% | 26.4% | 27.2% | 26.6% | -0.6% |
| Net Income Margin | 12.9% | 12.1% | 10.8% | 8.0% | 6.3% | -1.7% |
| CAPEX, % of revenue | 3.5% | 2.7% | 3.7% | 2.5% | 2.3% | -0.2% |
|
|---|
| ROIC | 39.6% | 37.7% | 27.6% | 17.8% | 13.0% | -4.8% |
| ROE | 41.8% | 34.4% | 27.0% | 18.2% | 13.3% | -4.9% |
| Net Debt/EBITDA | -0.2x | -0.5x | -1.1x | -1.1x | -1.0x | 0.1x |
Luxoft Holding, Inc. ($LXFT) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 209 | 228 | 237 | 233 | | 17.5% | 16.1% | 14.3% | 14.1% |
| EBITDA | 17 | 31 | 33 | 22 | | -29.0% | 16.8% | 11.4% | 0.7% |
| Net Income | 6 | 18 | 21 | 12 | | -55.1% | 13.2% | 10.9% | -14.8% |
Balance Sheet
|
|---|
| Cash | 98 | 56 | 69 | 104 | | -25.4% | -30.0% | -29.3% | -4.7% |
| Short Term Debt | 1 | 2 | 1 | 1 | | 5.0% | 205.7% | -5.0% | 35.2% |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 35.2% | 38.9% | 39.0% | 36.2% | | -5.4% | -2.6% | -0.7% | -0.3% |
| EBITDA Margin | 8.0% | 13.8% | 13.8% | 9.4% | | -5.3% | 0.1% | -0.4% | -1.3% |
| Net Income Margin | 3.0% | 8.1% | 8.7% | 5.0% | | -4.9% | -0.2% | -0.3% | -1.7% |
Peers in IT Consulting & Other Services
Below we provide Luxoft Holding, Inc. benchmarking against other companies in IT Consulting & Other 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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Gopher Protocol Inc ($GOPH) | | -25.0% | 83.3% | 5,471.1% | 461.0% |
| CLPS Incorporation ($CLPS) | | | | 8.1% | 56.0% |
| EPAM Systems, Inc. ($EPAM) | | 25.2% | 26.9% | 25.0% | 27.1% |
| Gartner, Inc. ($IT) | | 7.0% | 13.0% | 35.5% | 20.1% |
| Computer Task Group, Incorporated ($CTG) | | -6.0% | -12.1% | -7.3% | 19.1% |
| |
|---|
| Median (35 companies) | | 3.3% | 7.7% | 3.8% | 3.4% |
|---|
| Luxoft Holding, Inc. ($LXFT) | | 30.7% | 25.0% | 20.7% | 15.4% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Inpixon ($INPX) | 29.8% | 28.9% | 28.1% | 68.7% | 71.4% |
| Gartner, Inc. ($IT) | 60.5% | 61.2% | 61.3% | 60.1% | 63.1% |
| InterXion Holding N.V. ($INXN) | 59.2% | 60.8% | 61.5% | 61.1% | 60.9% |
| LiveRamp Holdings, Inc. ($RAMP) | 25.1% | 38.6% | 42.5% | 45.7% | 56.2% |
| Booz Allen Hamilton Holding Corporation ($BAH) | 50.4% | 50.8% | 52.3% | 53.6% | 53.5% |
| |
|---|
| Median (36 companies) | 25.8% | 30.9% | 28.1% | 27.7% | 29.4% |
|---|
| Luxoft Holding, Inc. ($LXFT) | 42.4% | 43.5% | 41.7% | 39.5% | 37.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InterXion Holding N.V. ($INXN) | 41.3% | 44.9% | 43.3% | 42.2% | 42.8% |
| Switch, Inc. ($SWCH) | | 50.7% | 37.0% | 28.5% | 39.8% |
| Cognizant Technology Solutions Corporation ($CTSH) | 20.4% | 19.9% | 19.8% | 19.7% | 20.5% |
| Taoping Inc. ($TAOP) | -54.0% | -237.5% | -117.7% | 13.2% | 18.7% |
| DXC Technology Company ($DXC) | | | | 8.0% | 16.3% |
| |
|---|
| Median (35 companies) | 4.8% | 3.3% | 6.7% | 6.3% | 7.2% |
|---|
| Luxoft Holding, Inc. ($LXFT) | 18.1% | 18.5% | 15.7% | 12.9% | 11.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InterXion Holding N.V. ($INXN) | 62.5% | 48.1% | 57.4% | 50.5% | 78.3% |
| Switch, Inc. ($SWCH) | | 71.5% | 90.2% | 106.4% | 67.9% |
| Taoping Inc. ($TAOP) | 1.4% | 29.2% | 34.0% | 20.8% | 8.7% |
| Teradata Corporation ($TDC) | 2.0% | 2.1% | 2.3% | 3.6% | 7.1% |
| ServiceSource International, Inc. ($SREV) | 3.4% | 4.7% | 10.4% | 7.2% | 6.5% |
| |
|---|
| Median (34 companies) | 0.9% | 0.8% | 1.1% | 1.2% | 1.5% |
|---|
| Luxoft Holding, Inc. ($LXFT) | 3.5% | 2.7% | 3.7% | 2.5% | 2.3% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Accenture plc ($ACN) | 80.5% | 81.0% | 81.3% | 61.7% | 66.1% |
| The Hackett Group, Inc. ($HCKT) | 11.2% | 19.5% | 31.7% | 23.8% | 24.6% |
| Cognizant Technology Solutions Corporation ($CTSH) | 24.7% | 22.0% | 21.3% | 21.9% | 23.8% |
| Booz Allen Hamilton Holding Corporation ($BAH) | 25.3% | 26.5% | 23.1% | 22.6% | 22.5% |
| EPAM Systems, Inc. ($EPAM) | 19.7% | 18.4% | 18.2% | 18.9% | 21.2% |
| |
|---|
| Median (43 companies) | 6.2% | 4.7% | 7.3% | 4.7% | 6.9% |
|---|
| Luxoft Holding, Inc. ($LXFT) | 39.6% | 37.7% | 27.6% | 17.8% | 13.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Infinite Group Inc ($IMCI) | | | 169.6x | | 10.5x |
| InterXion Holding N.V. ($INXN) | 3.3x | 2.9x | 3.4x | 3.8x | 4.6x |
| Gartner, Inc. ($IT) | 0.1x | 1.3x | 0.6x | 11.7x | 4.1x |
| Switch, Inc. ($SWCH) | | 2.2x | 4.0x | 3.2x | 3.3x |
| Presidio, Inc. ($PSDO) | 0.0x | | 5.6x | 3.6x | 3.1x |
| |
|---|
| Median (27 companies) | -0.2x | -0.2x | 0.4x | 0.8x | 1.2x |
|---|
| Luxoft Holding, Inc. ($LXFT) | -0.2x | -0.5x | -1.1x | -1.1x | -1.0x |
