Research Solutions Inc/CA reports 8.8% revenue growth in FY2018 and 5.3 pp EBITDA Margin growth from -11.3% to -6.0%
09/20/2018 • About Research Solutions Inc/CA (
$RSSS) • By InTwits
Research Solutions Inc/CA reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- The company operates at negative EBITDA Margin: -6.0%
- Research Solutions Inc/CA motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 was 0.0% while average EBITDA Margin was -4.1% for the sames years
- Research Solutions Inc/CA has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.2%.
- The company has unprofitable business model: ROIC is -45.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Research Solutions Inc/CA's Revenue increased on 8.8%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin surged on 56.3 pp from -57.2% to -0.89% in FY2018.
Gross Margin increased on 2.5 pp from 23.7% to 26.2% in FY2018. Gross Margin stuck to a growing trend at 1.9 pp per annum in the last 5 years. SG&A as a % of Revenue decreased on 2.5 pp from 35.2% to 32.6% in FY2018.
Net Income margin increased on 2.9 pp from -8.9% to -6.0% in FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 the company had CAPEX/Revenue of 0.10%. CAPEX/Revenue showed almost no change from FY2015 to FY2018. It's average CAPEX/Revenue for the last three years was 0.17%.
Return on investment
The company operates at negative ROIC (-45.2%) and ROE (-44.0%). ROIC surged on 10.9 pp from -56.1% to -45.2% in FY2018. ROE showed almost no change in FY2018.
Leverage (Debt)
Debt level is -6.5x Net Debt / EBITDA and Debt / EBITDA. Debt dropped on 25.2% while cash dropped on 15.0%.
Research Solutions Inc/CA has no short term refinancing risk: cash is higher than short term debt (4,097.5%).
Financial and operational results
FY ended 06/30/2018
Research Solutions Inc/CA ($RSSS) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 28.483 | 31.900 | 34.364 | 25.747 | 28.018 | 8.8% |
| Gross Profit | 5.454 | 6.176 | 6.501 | 6.104 | 7.349 | 20.4% |
| SG&A | 6.289 | 6.496 | 6.831 | 9.055 | 9.147 | 1.0% |
| EBITDA | -0.835 | -0.320 | -0.330 | -2.906 | -1.687 | |
| Net Income | -1.866 | 0.774 | -0.498 | -2.294 | -1.679 | |
Balance Sheet
|
|---|
| Cash | 1.885 | 1.354 | 6.077 | 5.774 | 4.908 | -15.0% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.111 | 0.120 | 8.0% |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.328 | 0.209 | -36.5% |
Cash flow
|
|---|
| Capex | 0.017 | 0.068 | 0.058 | 0.060 | 0.029 | -50.9% |
Ratios
|
|---|
| Revenue growth | -37.4% | 12.0% | 7.7% | -25.1% | 8.8% | |
| EBITDA growth | -213.2% | -61.7% | 3.2% | 780.9% | -41.9% | |
|
|---|
| Gross Margin | 19.1% | 19.4% | 18.9% | 23.7% | 26.2% | 2.5% |
| EBITDA Margin | -2.9% | -1.0% | -1.0% | -11.3% | -6.0% | 5.3% |
| SG&A, % of revenue | 22.1% | 20.4% | 19.9% | 35.2% | 32.6% | -2.5% |
| Net Income Margin | -6.6% | 2.4% | -1.4% | -8.9% | -6.0% | 2.9% |
| CAPEX, % of revenue | 0.1% | 0.2% | 0.2% | 0.2% | 0.1% | -0.1% |
|
|---|
| ROIC | -225.1% | -124.7% | -11.6% | -56.1% | -45.2% | 10.9% |
| ROE | | | -14.0% | -44.2% | -44.0% | 0.1% |
Peers in IT Consulting & Other Services
Below we provide Research Solutions Inc/CA 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 ($CTG) | | -6.0% | -12.1% | -7.3% | 19.1% |
| |
|---|
| Median (35 companies) | | 3.3% | 8.3% | 4.0% | 3.4% |
|---|
| Research Solutions Inc/CA ($RSSS) | | 12.0% | 7.7% | -25.1% | 8.8% |
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 ($BAH) | 50.4% | 50.8% | 52.3% | 53.6% | 53.5% |
| |
|---|
| Median (37 companies) | 27.1% | 32.4% | 29.5% | 30.0% | 29.9% |
|---|
| Research Solutions Inc/CA ($RSSS) | 19.1% | 19.4% | 18.9% | 23.7% | 26.2% |
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 ($DXC) | | | | 8.0% | 16.3% |
| |
|---|
| Median (36 companies) | 5.1% | 3.5% | 6.7% | 7.0% | 7.6% |
|---|
| Research Solutions Inc/CA ($RSSS) | -2.9% | -1.0% | -1.0% | -11.3% | -6.0% |
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. ($SREV) | 3.4% | 4.7% | 10.4% | 7.2% | 6.5% |
| |
|---|
| Median (35 companies) | 1.0% | 0.9% | 1.2% | 1.4% | 1.5% |
|---|
| Research Solutions Inc/CA ($RSSS) | 0.1% | 0.2% | 0.2% | 0.2% | 0.1% |
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. ($EPAM) | 19.7% | 18.4% | 18.2% | 18.9% | 21.2% |
| |
|---|
| Median (44 companies) | 7.5% | 6.9% | 7.7% | 5.6% | 6.9% |
|---|
| Research Solutions Inc/CA ($RSSS) | -225.1% | -124.7% | -11.6% | -56.1% | -45.2% |
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 (29 companies) | -0.2x | -0.3x | 0.2x | 0.6x | 0.8x |
|---|
