Gridsum Holding Inc. reports 128% CAPEX growth in 2018 while 8.2% Revenue decline
01/07/2019 • About Gridsum Holding Inc. (
$GSUM) • By InTwits
Gridsum Holding Inc. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- The company operates at negative EBITDA Margin: -119.9%
- Gridsum Holding Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 is 0.0%. Average EBITDA Margin for the same period was -50.7%
- Gridsum Holding Inc. has high CAPEX intensity: 5 year average CAPEX/Revenue was 11.9%. At the same time it's in pair with industry average of 13.3%
- CAPEX is quite volatile: $52m in 2018, $23m in 2017, $46m in 2016, $21m in 2015, $26m in 2014
- The company has unprofitable business model: ROIC is -80.6%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.1x while industry average is -2.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Gridsum Holding Inc.'s Revenue decreased on 8.2%. Revenue decline was accelerating on average at -27.4 pp per annum in 2014-2018. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 79.9 pp from -40.0% to -120% in 2018. During 2014-2018 EBITDA Margin topped in 2015 at -13.9% and was declining since that time.
Gross Margin decreased on 3.2 pp from 79.8% to 76.6% in 2018. During the last 5 years Gross Margin topped in 2015 at 85.0% and was declining since that time. SG&A as a % of Revenue increased on 9.2 pp from 71.6% to 80.8% in 2018. During the last 5 years SG&A as a % of Revenue bottomed in 2015 at 61.8% and was growing since that time.
Net Income margin dropped on 70.0 pp from -50.9% to -121% in 2018. During 2014-2018 Net Income margin topped in 2015 at -20.8% and was declining since that time.
Investments (CAPEX, working capital and M&A)
In 2018 Gridsum Holding Inc. had CAPEX/Revenue of 12.1%. CAPEX/Revenue increased on 3.3 pp from 8.8% in 2015 to 12.1% in 2018. Average CAPEX/Revenue for the last three years was 9.9%.
Return on investment
The company operates at negative ROIC (-80.6%) and ROE (-179.7%). ROIC dropped on 57.1 pp from -23.5% to -80.6% in 2018. ROE dropped on 143 pp from -36.5% to -180% in 2018. During 2014-2018 ROIC topped in 2016 at -13.3% and was declining since that time.
Leverage (Debt)
Debt level is 2.1x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA didn't change in 2018. Debt decreased on 6.9% while cash dropped on 44.4%.
Gridsum Holding Inc. has short term refinancing risk: cash is only 37.4% of short term debt.
Financial and operational results
FY ended 12/31/2018
Gridsum Holding Inc. ($GSUM) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 124.5 | 234.8 | 363.8 | 469.5 | 431.2 | -8.2% |
| Gross Profit | 103.4 | 199.6 | 308.1 | 374.9 | 330.4 | -11.9% |
| SG&A | 101.8 | 145.1 | 227.9 | 336.2 | 348.5 | 3.7% |
| EBITDA | -29.5 | -32.6 | -56.3 | -187.7 | -517.0 | |
| Net Income | -37.3 | -48.8 | -98.6 | -239.0 | -521.3 | |
Balance Sheet
|
|---|
| Cash | 61.8 | 198.5 | 520.5 | 166.7 | 92.7 | -44.4% |
| Short Term Debt | 4.0 | 0.0 | 65.0 | 266.0 | 247.7 | -6.9% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 25.9 | 20.7 | 46.0 | 23.0 | 52.3 | 127.8% |
Ratios
|
|---|
| Revenue growth | 99.1% | 88.6% | 54.9% | 29.1% | -8.2% | |
| EBITDA growth | 8.6% | 10.5% | 72.5% | 233.6% | 175.4% | |
|
|---|
| Gross Margin | 83.0% | 85.0% | 84.7% | 79.8% | 76.6% | -3.2% |
| EBITDA Margin | -23.7% | -13.9% | -15.5% | -40.0% | -119.9% | -79.9% |
| SG&A, % of revenue | 81.8% | 61.8% | 62.6% | 71.6% | 80.8% | 9.2% |
| Net Income Margin | -29.9% | -20.8% | -27.1% | -50.9% | -120.9% | -70.0% |
| CAPEX, % of revenue | 20.8% | 8.8% | 12.6% | 4.9% | 12.1% | 7.2% |
|
|---|
| ROIC | -56.7% | -27.3% | -13.3% | -23.5% | -80.6% | -57.1% |
| ROE | | | | -36.5% | -179.7% | -143.3% |
Peers in Application Software
Below you can find Gridsum Holding Inc. 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 ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 13.5% | 13.6% | 14.8% | 15.2% |
|---|
| Gridsum Holding Inc. ($GSUM) | | 88.6% | 54.9% | 29.1% | -8.2% |
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. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 62.8% | 61.7% | 63.8% | 64.4% | 65.7% |
|---|
| Gridsum Holding Inc. ($GSUM) | 83.0% | 85.0% | 84.7% | 79.8% | 76.6% |
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. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.1% | -9.4% | -4.7% | -3.3% | -3.2% |
|---|
| Gridsum Holding Inc. ($GSUM) | -23.7% | -13.9% | -15.5% | -40.0% | -119.9% |
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. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 2.9% | 2.3% | 2.4% |
|---|
| Gridsum Holding Inc. ($GSUM) | 20.8% | 8.8% | 12.6% | 4.9% | 12.1% |
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. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.2% | -11.2% | -9.2% | -10.2% | -9.3% |
|---|
| Gridsum Holding Inc. ($GSUM) | -56.7% | -27.3% | -13.3% | -23.5% | -80.6% |
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 |
|---|
