Net 1 UEPS Technologies, Inc. Net Income dropped on 46.3% and EBITDA Margin decreased on 7.3 pp from 22.7% to 15.4%
08/29/2018 • About Net 1 UEPS Technologies, Inc. (
$UEPS) • By InTwits
Net 1 UEPS Technologies, Inc. reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 15.4% in FY2018 vs. 22.7% in FY2017 vs. 24.4% in FY2014
- Net 1 UEPS Technologies, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.9%. At the same time it's a lot of higher than industry average of 7.4%.
- CAPEX is quite volatile: $10m in FY2018, $11m in FY2017, $36m in FY2016, $36m in FY2015, $24m in FY2014
- The company has business model with low profitability: ROIC is 7.0%
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 showed almost no change in FY2018. Revenue growth showed slowdown in FY18Q4 - it was -3.8% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 11.7 pp from -13.8% to -2.1% in 2018. During the last 5 years EBITDA Margin topped in FY2015 at 27.0% and was declining since that time.
Gross Margin decreased slightly on 1.8 pp from 52.1% to 50.3% in FY2018. SG&A as a % of Revenue increased on 2.1 pp from 29.4% to 31.5% in FY2018. During the last 5 years SG&A as a % of Revenue bottomed in FY2016 at 24.3% and was growing since that time.
Net Income margin decreased on 5.6 pp from 12.0% to 6.4% in FY2018. During FY2014-FY2018 Net Income margin topped in FY2015 at 15.1% and was declining since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 1.6% in FY2018. Net 1 UEPS Technologies, Inc. showed decline in CAPEX/Revenue of 4.2 pp from 5.8% in FY2015 to 1.6% in FY2018. For the last three years the average CAPEX/Revenue was 3.2%. During the last 5 years CAPEX as a % of Revenue topped in FY2016 at 6.1% and was declining since that time.
Return on investment
The company operates at low ROIC (7.0%) and ROE (5.4%). ROIC decreased on 6.8 pp from 13.8% to 7.0% in FY2018. ROE decreased on 5.9 pp from 11.3% to 5.4% in FY2018. ROIC followed a declining trend at -3.7 pp per annum in FY2014-FY2018. ROE followed a declining trend at -3.5 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.4x and Debt / EBITDA is 0.5x. Debt surged on 209% while cash dropped on 65.2%.
Net 1 UEPS Technologies, Inc. has no short term refinancing risk: cash is higher than short term debt (201.5%).
Valuation and dividends
Net 1 UEPS Technologies, Inc.'s trades at EV/EBITDA 3.3x and P/E 9.0x.
Financial and operational results
FY ended 06/30/2018
Net 1 UEPS Technologies, Inc. ($UEPS) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 581.7 | 626.0 | 590.7 | 610.1 | 612.9 | 0.5% |
| Gross Profit | 321.4 | 328.1 | 300.6 | 317.7 | 308.4 | -2.9% |
| SG&A | 165.9 | 156.5 | 143.6 | 179.3 | 193.0 | 7.7% |
| EBITDA | 142.1 | 169.2 | 154.8 | 138.4 | 94.4 | -31.8% |
| Net Income | 70.1 | 94.7 | 82.5 | 73.0 | 39.2 | -46.3% |
Balance Sheet
|
|---|
| Cash | 58.7 | 117.6 | 223.6 | 258.5 | 90.1 | -65.2% |
| Short Term Debt | 14.8 | 8.9 | 8.7 | 8.7 | 44.7 | 411.5% |
| Long Term Debt | 62.4 | 50.8 | 43.1 | 7.5 | 5.5 | -27.1% |
Cash flow
|
|---|
| Capex | 23.9 | 36.4 | 35.8 | 11.2 | 9.6 | -13.8% |
Ratios
|
|---|
| Revenue growth | 28.6% | 7.6% | -5.6% | 3.3% | 0.5% | |
| EBITDA growth | 122.8% | 19.1% | -8.5% | -10.6% | -31.8% | |
|
|---|
| Gross Margin | 55.3% | 52.4% | 50.9% | 52.1% | 50.3% | -1.8% |
| EBITDA Margin | 24.4% | 27.0% | 26.2% | 22.7% | 15.4% | -7.3% |
| SG&A, % of revenue | 28.5% | 25.0% | 24.3% | 29.4% | 31.5% | 2.1% |
| Net Income Margin | 12.1% | 15.1% | 14.0% | 12.0% | 6.4% | -5.6% |
| CAPEX, % of revenue | 4.1% | 5.8% | 6.1% | 1.8% | 1.6% | -0.3% |
|
|---|
| ROIC | 20.7% | 23.6% | 18.7% | 13.8% | 7.0% | -6.8% |
| ROE | 18.0% | 20.6% | 15.1% | 11.3% | 5.4% | -5.9% |
| Net Debt/EBITDA | 0.1x | -0.3x | -1.1x | -1.7x | -0.4x | 1.3x |
Net 1 UEPS Technologies, Inc. ($UEPS) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 153 | 148 | 163 | 149 | | -2.0% | -2.0% | 10.0% | -3.8% |
| EBITDA | 34 | 25 | 17 | 19 | | -19.8% | -30.9% | -51.5% | -25.9% |
| Net Income | 19 | 10 | 32 | 7 | | -20.9% | -48.4% | 76.0% | -37.7% |
Balance Sheet
|
|---|
| Cash | 138 | 65 | 87 | 90 | | -32.6% | -67.4% | -60.9% | -65.2% |
| Short Term Debt | 59 | 51 | 56 | 45 | | 554.0% | 509.7% | 531.3% | 411.5% |
| Long Term Debt | 35 | 20 | 19 | 5 | | 92.0% | 33.6% | 16.4% | -27.1% |
Ratios
|
|---|
| Gross Margin | 51.1% | 50.1% | 52.2% | 47.7% | | -0.9% | -1.3% | 0.1% | -5.1% |
| EBITDA Margin | 22.3% | 16.9% | 10.4% | 12.4% | | -5.0% | -7.0% | -13.2% | -3.7% |
| Net Income Margin | 12.8% | 6.5% | 19.9% | 4.7% | | -3.1% | -5.8% | 7.5% | -2.6% |
Peers in Data Processing & Outsourced S
Below you can find Net 1 UEPS Technologies, Inc. benchmarking vs. other companies in Data Processing & Outsourced S 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 |
|---|
| Verra Mobility Corp ($VRRM) | | | | | 167.8% |
| StoneCo Ltd ($STNE) | | | | 74.3% | 106.0% |
| PagSeguro Digital Ltd. ($PAGS) | | 107.1% | 68.7% | 121.7% | 71.8% |
| Payment Data Systems, Inc. ($PYDS) | | 7.4% | -16.0% | 20.7% | 71.7% |
| StarTek, Inc. ($SRT) | | 12.8% | 8.9% | -4.8% | 66.4% |
| |
|---|
| Median (55 companies) | | 7.0% | 7.7% | 11.8% | 7.5% |
|---|
| Net 1 UEPS Technologies, Inc. ($UEPS) | | 7.6% | -5.6% | 3.3% | 0.5% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Verra Mobility Corp ($VRRM) | | | | 97.4% | 97.5% |
| Everi Holdings Inc. ($EVRI) | 25.8% | 38.3% | 36.1% | 34.5% | 79.9% |
| StoneCo Ltd ($STNE) | | | 69.7% | 70.8% | 79.5% |
| Paychex, Inc. ($PAYX) | 70.9% | 70.5% | 71.0% | 70.8% | 69.9% |
| Global Payments Inc. ($GPN) | 62.7% | 63.2% | 60.4% | 51.5% | 67.5% |
| |
|---|
| Median (44 companies) | 38.4% | 39.5% | 39.2% | 38.9% | 40.9% |
|---|
| Net 1 UEPS Technologies, Inc. ($UEPS) | 55.3% | 52.4% | 50.9% | 52.1% | 50.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Visa Inc. ($V) | 64.0% | 68.9% | 55.6% | 69.2% | 65.8% |
| FleetCor Technologies, Inc. ($FLT) | 56.1% | 50.4% | 52.0% | 50.8% | 55.9% |
| StoneCo Ltd ($STNE) | | | 31.4% | 26.0% | 53.0% |
| Mastercard Incorporated ($MA) | 57.5% | 56.3% | 56.9% | 56.5% | 51.8% |
| Everi Holdings Inc. ($EVRI) | 9.6% | 14.7% | 3.0% | 20.4% | 45.2% |
| |
|---|
| Median (56 companies) | 20.4% | 21.0% | 21.2% | 20.6% | 19.4% |
|---|
| Net 1 UEPS Technologies, Inc. ($UEPS) | 24.4% | 27.0% | 26.2% | 22.7% | 15.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Crypto Co/The ($CRCW) | 0.0% | 0.0% | | 1,216.6% | 853.5% |
| Steel Connect, Inc. ($STCN) | 0.6% | 1.5% | 1.7% | 1.1% | 75.6% |
| Everi Holdings Inc. ($EVRI) | 3.0% | 9.3% | 9.4% | 9.9% | 21.9% |
| StoneCo Ltd ($STNE) | | | 7.2% | 18.4% | 8.9% |
| Cardtronics plc ($CATM) | 10.2% | 11.9% | 9.9% | 9.6% | 8.0% |
| |
|---|
| Median (56 companies) | 3.1% | 3.0% | 3.2% | 2.9% | 3.2% |
|---|
| Net 1 UEPS Technologies, Inc. ($UEPS) | 4.1% | 5.8% | 6.1% | 1.8% | 1.6% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| GreenSky, Inc. ($GSKY) | | | | 156.4% | 93.7% |
| Mastercard Incorporated ($MA) | 63.5% | 57.5% | 57.5% | 60.6% | 64.7% |
| Paychex, Inc. ($PAYX) | 54.5% | 58.7% | 61.9% | 63.9% | 64.5% |
| NIC Inc. ($EGOV) | 64.6% | 61.2% | 63.1% | 52.1% | 39.3% |
| Automatic Data Processing, Inc. ($ADP) | 23.9% | 28.9% | 37.9% | 36.6% | 37.5% |
| |
|---|
| Median (62 companies) | 13.3% | 12.8% | 11.1% | 10.6% | 12.1% |
|---|
| Net 1 UEPS Technologies, Inc. ($UEPS) | 20.7% | 23.6% | 18.7% | 13.8% | 7.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| StarTek, Inc. ($SRT) | -0.1x | | 2.2x | 2.3x | 18.4x |
| Square, Inc. ($SQ) | | | | | 13.3x |
| Steel Connect, Inc. ($STCN) | -12.5x | | | | 12.6x |
| Exela Technologies Inc ($XELAU) | | | 8.1x | | 9.7x |
| Alliance Data Systems Corporation ($ADS) | 9.3x | 9.1x | 10.7x | 10.1x | 9.0x |
| |
|---|
| Median (54 companies) | 0.6x | 0.7x | 1.6x | 2.3x | 2.2x |
|---|
| Net 1 UEPS Technologies, Inc. ($UEPS) | 0.1x | -0.3x | -1.1x | -1.7x | -0.4x |
