MAM Software Group, Inc. reports 29.9% Net Income decline in 2018 and almost no change in EBITDA Margin of 15.2%
09/14/2018 • About MAM Software Group, Inc. (
$MAMS) • By InTwits
MAM Software Group, Inc. reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- MAM Software Group, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.6%.
- The company has highly profitable business model: ROIC is 25.2%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.4x 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 13.2%. Revenue growth showed acceleration in FY18Q4 - it increased 15.1% YoY. During FY2014-FY2018 Revenue growth bottomed in FY2017 at -1.9%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 15.4 pp from -9.7% to -25.2% in FY2018. EBITDA Margin followed a growing trend at 0.87 pp per annum in FY2014-FY2018.
Gross Margin showed almost no change in FY2018. SG&A as a % of Revenue decreased slightly on 1.5 pp from 29.0% to 27.5% in FY2018. SG&A as a % of Revenue followed a declining trend at -1.2 pp per annum in the last 5 years.
Net Income margin decreased on 5.5 pp from 14.5% to 9.0% in FY2018. During the last 5 years Net Income margin topped in FY2017 at 14.5%.
Investments (CAPEX, working capital and M&A)
In FY2018 MAM Software Group, Inc. had CAPEX/Revenue of 0.31%. CAPEX/Revenue decreased slightly on 0.81 pp from 1.1% in FY2015 to 0.31% in FY2018. For the last three years the average CAPEX/Revenue was 0.42%.
Return on investment
The company operates at high and attractive ROIC (25.2%) and ROE (27.7%). ROIC increased slightly on 0.99 pp from 24.2% to 25.2% in FY2018. ROE dropped on 34.6 pp from 62.3% to 27.7% in FY2018. ROIC stuck to a growing trend at 2.9 pp per annum in FY2014-FY2018. During FY2014-FY2018 ROE topped in FY2017 at 62.3%.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.4x and Debt / EBITDA is 1.2x. Net Debt / EBITDA dropped on 1.0x from 1.4x to 0.4x in FY2018. Debt dropped on 21.3% while cash jumped on 231%. During the last 5 years Net Debt/EBITDA topped in FY2016 at 2.1x and was declining since that time.
MAM Software Group, Inc. has no short term refinancing risk: cash is higher than short term debt (230.3%).
Valuation and dividends
MAM Software Group, Inc.'s trades at EV/EBITDA 16.9x and P/E 28.1x.
Management team
The company's CEO Michael Grant Jamieson "Mike" is a founder and has spent 9 years with the company. MAM Software Group, Inc.'s CFO is Brian H Callahan. Brian H Callahan has 3 years tenure at the company.
Financial and operational results
FY ended 06/30/2018
MAM Software Group, Inc. ($MAMS) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 30.690 | 31.638 | 32.212 | 31.596 | 35.777 | 13.2% |
| Gross Profit | 17.201 | 17.861 | 17.614 | 17.403 | 19.689 | 13.1% |
| SG&A | 10.020 | 9.809 | 9.667 | 9.164 | 9.824 | 7.2% |
| EBITDA | 3.487 | 4.439 | 4.448 | 4.754 | 5.448 | 14.6% |
| Net Income | 1.672 | 3.005 | 3.552 | 4.578 | 3.210 | -29.9% |
Balance Sheet
|
|---|
| Cash | 7.008 | 6.793 | 0.491 | 1.260 | 4.171 | 231.0% |
| Short Term Debt | 0.000 | 0.000 | 1.925 | 1.734 | 1.811 | 4.4% |
| Long Term Debt | 0.000 | 0.000 | 7.853 | 6.386 | 4.581 | -28.3% |
Cash flow
|
|---|
| Capex | 0.224 | 0.354 | 0.207 | 0.096 | 0.110 | 14.6% |
Ratios
|
|---|
| Revenue growth | 11.7% | 3.1% | 1.8% | -1.9% | 13.2% | |
| EBITDA growth | -32.4% | 27.3% | 0.2% | 6.9% | 14.6% | |
|
|---|
| Gross Margin | 56.0% | 56.5% | 54.7% | 55.1% | 55.0% | -0.0% |
| EBITDA Margin | 11.4% | 14.0% | 13.8% | 15.0% | 15.2% | 0.2% |
| SG&A, % of revenue | 32.6% | 31.0% | 30.0% | 29.0% | 27.5% | -1.5% |
| Net Income Margin | 5.4% | 9.5% | 11.0% | 14.5% | 9.0% | -5.5% |
| CAPEX, % of revenue | 0.7% | 1.1% | 0.6% | 0.3% | 0.3% | 0.0% |
|
|---|
| ROIC | 13.3% | 19.3% | 21.1% | 24.2% | 25.2% | 1.0% |
| ROE | 10.5% | 16.8% | 30.3% | 62.3% | 27.7% | -34.6% |
| Net Debt/EBITDA | -2.0x | -1.5x | 2.1x | 1.4x | 0.4x | -1.0x |
MAM Software Group, Inc. ($MAMS) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 9 | 9 | 9 | 10 | | 7.1% | 15.1% | 15.7% | 15.1% |
| EBITDA | 2 | 1 | 1 | 1 | | 11.6% | 110.0% | 38.9% | -16.8% |
| Net Income | 1 | -0 | 1 | 1 | | -8.2% | -143.2% | 79.5% | -60.7% |
Balance Sheet
|
|---|
| Cash | 2 | 3 | 4 | 4 | | 632.1% | 344.6% | 363.0% | 231.0% |
| Short Term Debt | 2 | 2 | 2 | 2 | | -4.8% | -1.1% | 12.6% | 4.4% |
| Long Term Debt | 6 | 6 | 5 | 5 | | -19.9% | -19.1% | -26.6% | -28.3% |
Ratios
|
|---|
| Gross Margin | 55.9% | 53.0% | 54.6% | 56.5% | | -2.9% | 0.3% | -0.1% | 2.6% |
| EBITDA Margin | 19.3% | 11.3% | 14.9% | 15.3% | | 0.8% | 5.1% | 2.5% | -5.8% |
| Net Income Margin | 12.9% | -0.9% | 13.4% | 10.1% | | -2.1% | -3.4% | 4.7% | -19.4% |
Peers in Systems Software
Below we provide MAM Software Group, Inc. benchmarking against other companies in Systems Software 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 |
|---|
| 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. ($FNJN) | | -6.2% | 292.3% | 174.6% | 63.0% |
| |
|---|
| Median (48 companies) | | 20.6% | 14.7% | 16.6% | 20.4% |
|---|
| MAM Software Group, Inc. ($MAMS) | | 3.1% | 1.8% | -1.9% | 13.2% |
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. ($ATTU) | 90.7% | 84.9% | 83.9% | 84.1% | 87.5% |
| |
|---|
| Median (53 companies) | 77.0% | 75.4% | 73.6% | 74.1% | 75.0% |
|---|
| MAM Software Group, Inc. ($MAMS) | 56.0% | 56.5% | 54.7% | 55.1% | 55.0% |
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. ($CA) | 33.9% | 36.7% | 37.2% | 36.1% | 35.3% |
| |
|---|
| Median (47 companies) | -2.4% | -6.6% | -9.8% | -5.4% | -4.7% |
|---|
| MAM Software Group, Inc. ($MAMS) | 11.4% | 14.0% | 13.8% | 15.0% | 15.2% |
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. ($ZS) | | 12.5% | 7.8% | 6.5% | 8.0% |
| |
|---|
| Median (48 companies) | 2.9% | 2.2% | 2.1% | 2.4% | 2.6% |
|---|
| MAM Software Group, Inc. ($MAMS) | 0.7% | 1.1% | 0.6% | 0.3% | 0.3% |
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. ($CHKP) | 22.2% | 23.7% | 24.7% | 26.8% | 25.5% |
| Red Hat, Inc. ($RHT) | 15.1% | 14.1% | 14.2% | 16.4% | 22.4% |
| GlobalSCAPE, Inc. ($GSB) | 21.9% | 27.0% | 18.9% | 8.5% | 19.9% |
| |
|---|
| Median (56 companies) | 0.0% | 0.0% | -4.3% | -4.7% | -1.9% |
|---|
| MAM Software Group, Inc. ($MAMS) | 13.3% | 19.3% | 21.1% | 24.2% | 25.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| NXT-ID Inc. ($NXTD) | | | | | 9.7x |
| Symantec Corporation ($SYMC) | -3.2x | -1.5x | -5.0x | 10.0x | 4.7x |
| SolarWinds Corporation ($SWI) | | | | 6.2x | 4.1x |
| Oracle Corporation ($ORCL) | 0.4x | 1.2x | 1.6x | 2.4x | 2.4x |
| ServiceNow, Inc. ($NOW) | | | | 9.0x | 0.9x |
| |
|---|
| Median (22 companies) | -2.7x | -1.4x | -1.5x | -0.8x | -0.5x |
|---|
| MAM Software Group, Inc. ($MAMS) | -2.0x | -1.5x | 2.1x | 1.4x | 0.4x |
