Datawatch Corporation reports 14.9% revenue growth in FY2018 and 9.2 pp EBITDA Margin decline from -8.7% to -17.8%
11/15/2018 • About Datawatch Corporation (
$DWCH) • By InTwits
Datawatch Corporation 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: -17.8%
- Datawatch Corporation motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 was 0.0% while average EBITDA Margin was -50.8% for the sames years
- Datawatch Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.4%. At the same time it's in pair with industry average of 6.1%
- CAPEX is quite volatile: $0m in FY2018, $0m in FY2017, $1m in FY2016, $0m in FY2015, $0m in FY2014
- The company has unprofitable business model: ROIC is -26.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 14.9%. Revenue growth showed small slowdown in FY18Q4 - it was 13.5% YoY. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 9.2 pp from -8.7% to -17.8% in FY2018.
Gross Margin showed almost no change in FY2018. Gross Margin stuck to a growing trend at 2.7 pp per annum in the last 5 years. SG&A as a % of Revenue increased on 5.7 pp from 76.9% to 82.6% in FY2018. SG&A as a % of Revenue followed a declining trend at -10.6 pp per annum in the last 5 years.
Net Income margin dropped on 11.2 pp from -11.0% to -22.2% in FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 the company had CAPEX/Revenue of 0.41%. The company's CAPEX/Revenue decreased slightly on 1.2 pp from 1.6% in FY2015 to 0.41% in FY2018. It's average level of CAPEX/Revenue for the last three years was 1.4%. During FY2014-FY2018 CAPEX as a % of Revenue topped in FY2016 at 3.2% and was declining since that time.
Return on investment
The company operates at negative ROIC (-26.9%) and ROE (-31.3%). ROIC dropped on 12.5 pp from -14.3% to -26.9% in FY2018. ROE dropped on 19.3 pp from -12.0% to -31.3% in FY2018.
Leverage (Debt)
Debt level is -35.5x Net Debt / EBITDA and Debt / EBITDA. Debt jumped while cash dropped on 54.9%.
Datawatch Corporation has no short term refinancing risk: cash is higher than short term debt (672.0%).
Financial and operational results
FY ended 09/30/2018
Datawatch Corporation ($DWCH) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 35.087 | 30.221 | 30.462 | 36.263 | 41.678 | 14.9% |
| Gross Profit | 27.723 | 24.097 | 25.457 | 32.019 | 36.758 | 14.8% |
| SG&A | 40.314 | 35.636 | 30.419 | 27.901 | 34.432 | 23.4% |
| EBITDA | -17.428 | -49.585 | -10.581 | -3.143 | -7.433 | |
| Net Income | -22.383 | -49.787 | -14.632 | -3.993 | -9.252 | |
Balance Sheet
|
|---|
| Cash | 47.668 | 35.162 | 28.034 | 30.451 | 13.735 | -54.9% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 2.044 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 6.440 | |
Cash flow
|
|---|
| Capex | 0.276 | 0.490 | 0.966 | 0.277 | 0.170 | -38.6% |
Ratios
|
|---|
| Revenue growth | 15.8% | -13.9% | 0.8% | 19.0% | 14.9% | |
| EBITDA growth | 1,043.6% | 184.5% | -78.7% | -70.3% | 136.5% | |
|
|---|
| Gross Margin | 79.0% | 79.7% | 83.6% | 88.3% | 88.2% | -0.1% |
| EBITDA Margin | -49.7% | -164.1% | -34.7% | -8.7% | -17.8% | -9.2% |
| SG&A, % of revenue | 114.9% | 117.9% | 99.9% | 76.9% | 82.6% | 5.7% |
| Net Income Margin | -63.8% | -164.7% | -48.0% | -11.0% | -22.2% | -11.2% |
| CAPEX, % of revenue | 0.8% | 1.6% | 3.2% | 0.8% | 0.4% | -0.4% |
|
|---|
| ROIC | -29.0% | -76.0% | -33.6% | -14.3% | -26.9% | -12.5% |
| ROE | -31.5% | -73.0% | -36.8% | -12.0% | -31.3% | -19.3% |
Datawatch Corporation ($DWCH) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 10 | 9 | 11 | 12 | | 16.4% | 7.3% | 22.5% | 13.5% |
| EBITDA | -1 | -3 | -2 | -2 | | | | | |
| Net Income | -1 | -4 | -2 | -2 | | | | | |
Balance Sheet
|
|---|
| Cash | 30 | 15 | 14 | 14 | | 13.2% | -46.6% | -53.8% | -54.9% |
| Short Term Debt | 0 | 2 | 2 | 2 | | | | | |
| Long Term Debt | 0 | 8 | 7 | 6 | | | | | |
Ratios
|
|---|
| Gross Margin | 91.2% | 87.0% | 86.8% | 88.0% | | 6.2% | 1.6% | -3.9% | -3.3% |
| EBITDA Margin | -7.1% | -35.5% | -17.2% | -13.0% | | 11.7% | -29.3% | -13.3% | -6.1% |
| Net Income Margin | -8.6% | -41.2% | -20.5% | -19.6% | | 18.5% | -36.0% | -15.0% | -11.6% |
Peers in Application Software
Below you can find Datawatch Corporation benchmarking vs. other companies in Application Software 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 |
|---|
| 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 ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (150 companies) | 27.9% | 14.0% | 14.3% | 14.8% | 15.2% |
|---|
| Datawatch Corporation ($DWCH) | | -13.9% | 0.8% | 19.0% | 14.9% |
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. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (149 companies) | 62.8% | 61.7% | 63.8% | 64.4% | 65.3% |
|---|
| Datawatch Corporation ($DWCH) | 79.0% | 79.7% | 83.6% | 88.3% | 88.2% |
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. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (151 companies) | -10.1% | -9.4% | -4.7% | -3.3% | -3.1% |
|---|
| Datawatch Corporation ($DWCH) | -49.7% | -164.1% | -34.7% | -8.7% | -17.8% |
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. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (152 companies) | 2.8% | 2.7% | 2.9% | 2.3% | 2.4% |
|---|
| Datawatch Corporation ($DWCH) | 0.8% | 1.6% | 3.2% | 0.8% | 0.4% |
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. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (178 companies) | -14.2% | -11.2% | -9.2% | -10.2% | -9.1% |
|---|
| Datawatch Corporation ($DWCH) | -29.0% | -76.0% | -33.6% | -14.3% | -26.9% |
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 |
|---|
