Model N, Inc. revenue growth decelerated to 17.9% in FY2018 vs. 22.6% a year earliner
11/06/2018 • About Model N, Inc. (
$MODN) • By InTwits
Model N, Inc. reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- The company operates at negative EBITDA Margin: -8.1%
- Model N, Inc. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 was 0.0% while average EBITDA Margin was -17.9% for the sames years
- Model N, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.3%. At the same time it's in pair with industry average of 3.6%
- CAPEX is quite volatile: $0m in FY2018, $1m in FY2017, $3m in FY2016, $5m in FY2015, $2m in FY2014
- The company has unprofitable business model: ROIC is -21.6%
- It operates with high leverage: Net Debt/EBITDA is 4.1x while industry average is -2.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Model N, Inc.'s Revenue jumped on 17.9%. Revenue growth showed slowdown in FY18Q4 - it was 3.1% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 24.8 pp from 20.4% to 45.2% in 2018.
Gross Margin increased on 4.3 pp from 53.4% to 57.7% in FY2018. SG&A as a % of Revenue decreased on 9.0 pp from 59.2% to 50.2% in FY2018. During FY2014-FY2018 SG&A as a % of Revenue topped in FY2017 at 59.2%.
Net Income margin surged on 11.9 pp from -30.1% to -18.2% in FY2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 0.16% in FY2018. The company showed decline in CAPEX/Revenue of 4.7 pp from 4.9% in FY2015 to 0.16% in FY2018. It's average level of CAPEX/Revenue for the last three years was 1.2%. During the last 5 years CAPEX as a % of Revenue topped in FY2015 at 4.9% and was declining since that time.
Return on investment
The company operates at negative ROIC (-21.6%) and ROE (-69.4%). ROIC jumped on 25.3 pp from -46.9% to -21.6% in FY2018. ROE increased on 4.2 pp from -73.6% to -69.4% in FY2018. ROE stuck to a declining trend at -14.4 pp per annum in FY2014-FY2018.
Leverage (Debt)
Company's Net Debt / EBITDA is 4.1x and Debt / EBITDA is . Debt decreased on 6.1% while cash decreased slightly on 1.5%.
Model N, Inc. has no short term refinancing risk: cash is higher than short term debt (4,123.9%).
Management team
Jason Blessing is a Model N, Inc.'s CEO. Jason Blessing is a founder and has spent 1 year with the company. The company's CFO David Barter has spent 2 years with the company.
Financial and operational results
FY ended 09/30/2018
Model N, Inc. ($MODN) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 81.8 | 93.8 | 107.0 | 131.2 | 154.6 | 17.9% |
| Gross Profit | 44.0 | 52.2 | 53.3 | 70.1 | 89.3 | 27.4% |
| SG&A | 45.7 | 53.4 | 62.3 | 77.6 | 77.7 | 0.1% |
| EBITDA | -16.7 | -15.1 | -26.8 | -30.4 | -12.5 | |
| Net Income | -20.9 | -19.6 | -33.1 | -39.5 | -28.2 | |
Balance Sheet
|
|---|
| Cash | 101.0 | 91.0 | 66.1 | 57.6 | 56.7 | -1.5% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 4.8 | 1.4 | -71.1% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 52.5 | 52.3 | -0.2% |
Cash flow
|
|---|
| Capex | 2.2 | 4.6 | 3.2 | 0.7 | 0.3 | -65.4% |
Ratios
|
|---|
| Revenue growth | -19.8% | 14.7% | 14.1% | 22.6% | 17.9% | |
| EBITDA growth | -709.8% | -9.7% | 78.0% | 13.5% | -59.0% | |
|
|---|
| Gross Margin | 53.8% | 55.7% | 49.8% | 53.4% | 57.7% | 4.3% |
| EBITDA Margin | -20.4% | -16.1% | -25.1% | -23.2% | -8.1% | 15.1% |
| SG&A, % of revenue | 55.9% | 57.0% | 58.3% | 59.2% | 50.2% | -9.0% |
| Net Income Margin | -25.5% | -20.9% | -31.0% | -30.1% | -18.2% | 11.9% |
| CAPEX, % of revenue | 2.7% | 4.9% | 3.0% | 0.6% | 0.2% | -0.4% |
|
|---|
| ROIC | -22.2% | -22.2% | -43.9% | -46.9% | -21.6% | 25.3% |
| ROE | -22.9% | -22.8% | -44.4% | -73.6% | -69.4% | 4.2% |
Model N, Inc. ($MODN) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 39 | 39 | 40 | 37 | | 39.2% | 18.0% | 15.7% | 3.1% |
| EBITDA | -2 | -0 | -9 | -1 | | | | | |
| Net Income | -5 | -4 | -15 | -4 | | | | | |
Balance Sheet
|
|---|
| Cash | 48 | 55 | 58 | 57 | | -7.9% | 2.9% | 11.2% | -1.5% |
| Short Term Debt | 5 | 5 | 6 | 1 | | | | | -71.1% |
| Long Term Debt | 53 | 52 | 53 | 52 | | | -7.6% | -7.3% | -0.2% |
Ratios
|
|---|
| Gross Margin | 57.0% | 56.0% | 58.5% | 59.6% | | 6.2% | 4.3% | 4.5% | 3.0% |
| EBITDA Margin | -4.5% | -0.6% | -22.6% | -4.1% | | 20.1% | 37.2% | -4.0% | 9.7% |
| Net Income Margin | -13.5% | -9.9% | -39.0% | -9.9% | | 14.9% | 27.6% | -8.5% | 15.5% |
Peers in Application Software
Below we provide Model N, Inc. benchmarking against other companies in Application 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 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (150 companies) | 27.9% | 13.5% | 13.7% | 14.8% | 15.2% |
|---|
| Model N, Inc. ($MODN) | | 14.7% | 14.1% | 22.6% | 17.9% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (149 companies) | 63.4% | 61.9% | 64.2% | 64.6% | 66.0% |
|---|
| Model N, Inc. ($MODN) | 53.8% | 55.7% | 49.8% | 53.4% | 57.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (151 companies) | -10.1% | -9.4% | -4.7% | -3.3% | -3.1% |
|---|
| Model N, Inc. ($MODN) | -20.4% | -16.1% | -25.1% | -23.2% | -8.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (152 companies) | 2.8% | 2.7% | 2.9% | 2.3% | 2.4% |
|---|
| Model N, Inc. ($MODN) | 2.7% | 4.9% | 3.0% | 0.6% | 0.2% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (178 companies) | -14.2% | -11.2% | -9.2% | -10.2% | -9.1% |
|---|
| Model N, Inc. ($MODN) | -22.2% | -22.2% | -43.9% | -46.9% | -21.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (70 companies) | -1.4x | -1.0x | -0.9x | -0.8x | -0.7x |
|---|
