Aerohive Networks, Inc. revenue decline accelerated from 5.6% in 2017 to 19.0% in 2018
02/06/2019 • About Aerohive Networks, Inc. (
$HIVE) • By InTwits
Aerohive Networks, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- The company operates at negative EBITDA Margin: -9.6%
- Aerohive Networks, 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 -17.2%
- Aerohive Networks, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.3%. At the same time it's a lot of higher than industry average of 5.2%.
- CAPEX is quite volatile: $2m in 2018, $1m in 2017, $2m in 2016, $2m in 2015, $2m in 2014
- The company has unprofitable business model: ROIC is -42.4%
- It operates with high leverage: Net Debt/EBITDA is 4.8x while industry average is -0.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Aerohive Networks, Inc.'s Revenue increased slightly on 0.88%. Revenue growth showed acceleration in 18Q4 - it increased 6.7% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.8 pp from 6.6% to 8.4% in 2018. During 2014-2018 EBITDA Margin bottomed in 2015 at -26.0% and was growing since that time.
Gross Margin decreased slightly on 1.6 pp from 67.4% to 65.8% in 2018. SG&A as a % of Revenue decreased on 3.3 pp from 57.6% to 54.4% in 2018. SG&A as a % of Revenue followed a declining trend at -4.1 pp per annum in the last 5 years.
Net Income margin increased on 2.6 pp from -14.4% to -11.8% in 2018. During the last 5 years Net Income margin bottomed in 2015 at -29.2% and was growing since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 1.6% in 2018. CAPEX/Revenue showed almost no change from 2015 to 2018. It's average level of CAPEX/Revenue for the last three years was 1.1%. During 2014-2018 CAPEX as a % of Revenue bottomed in 2017 at 0.39%.
Return on investment
The company operates at negative ROIC (-42.4%) and ROE (-86.2%). ROIC increased on 2.8 pp from -45.1% to -42.4% in 2018. ROE decreased on 3.8 pp from -82.5% to -86.2% in 2018. During 2014-2018 ROIC bottomed in 2016 at -67.1% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 4.8x and Debt / EBITDA is . Debt decreased slightly on 0.90% while cash decreased on 4.4%.
Aerohive Networks, Inc. has no short term refinancing risk: cash is higher than short term debt (129.1%).
Financial and operational results
FY ended 12/31/2018
Aerohive Networks, Inc. ($HIVE) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 137.3 | 151.7 | 169.8 | 153.6 | 154.9 | 0.9% |
| Gross Profit | 92.5 | 101.3 | 114.5 | 103.5 | 102.0 | -1.5% |
| SG&A | 93.5 | 107.4 | 109.8 | 88.5 | 84.2 | -4.8% |
| EBITDA | -26.2 | -39.5 | -33.3 | -18.3 | -14.8 | |
| Net Income | -30.6 | -44.2 | -36.9 | -22.1 | -18.3 | |
Balance Sheet
|
|---|
| Cash | 98.0 | 45.7 | 34.3 | 27.2 | 26.0 | -4.4% |
| Short Term Debt | 12.5 | 0.0 | 20.0 | 0.2 | 20.2 | 10,747.3% |
| Long Term Debt | 7.3 | 20.0 | 0.0 | 20.8 | 0.6 | -97.2% |
Cash flow
|
|---|
| Capex | 2.4 | 2.3 | 2.2 | 0.6 | 2.4 | 310.8% |
Ratios
|
|---|
| Revenue growth | 28.1% | 10.5% | 12.0% | -9.6% | 0.9% | |
| EBITDA growth | -7.0% | 50.7% | -15.8% | -45.1% | -19.0% | |
|
|---|
| Gross Margin | 67.4% | 66.8% | 67.4% | 67.4% | 65.8% | -1.6% |
| EBITDA Margin | -19.1% | -26.0% | -19.6% | -11.9% | -9.6% | 2.3% |
| SG&A, % of revenue | 68.1% | 70.8% | 64.7% | 57.6% | 54.4% | -3.3% |
| Net Income Margin | -22.3% | -29.2% | -21.7% | -14.4% | -11.8% | 2.6% |
| CAPEX, % of revenue | 1.7% | 1.5% | 1.3% | 0.4% | 1.6% | 1.2% |
|
|---|
| ROIC | -58.1% | -62.0% | -67.1% | -45.1% | -42.4% | 2.8% |
| ROE | | -89.3% | -106.0% | -82.5% | -86.2% | -3.8% |
Aerohive Networks, Inc. ($HIVE) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 36 | 40 | 41 | 38 | | -1.5% | -4.1% | 3.2% | 6.7% |
| EBITDA | -7 | -2 | -2 | -4 | | | | | |
| Net Income | -7 | -3 | -2 | -6 | | | | | |
Balance Sheet
|
|---|
| Cash | 21 | 35 | 32 | 26 | | -25.7% | 1.0% | -4.3% | -4.4% |
| Short Term Debt | 20 | 20 | 20 | 20 | | | | | 10,747.3% |
| Long Term Debt | 0 | 0 | 0 | 1 | | -100.0% | -100.0% | -100.0% | -97.2% |
Ratios
|
|---|
| Gross Margin | 66.2% | 66.0% | 65.6% | 65.6% | | -0.8% | -1.7% | -1.0% | -2.9% |
| EBITDA Margin | -18.2% | -5.2% | -4.5% | -11.5% | | 4.1% | 1.4% | 6.2% | -2.5% |
| Net Income Margin | -20.5% | -7.0% | -6.0% | -15.1% | | 4.6% | 2.0% | 6.9% | -3.6% |
Peers in Communications Equipment
Below you can find Aerohive Networks, Inc. benchmarking vs. other companies in Communications Equipment 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 |
|---|
| Ribbon Communications Inc. ($RBBN) | | | | 30.6% | 75.2% |
| Extreme Networks, Inc. ($EXTR) | | 6.4% | -4.4% | 13.2% | 64.4% |
| Optical Cable Corporation ($OCC) | | -11.3% | -12.2% | -0.8% | 37.0% |
| ParkerVision Inc ($PRKR) | | | 37,601.2% | -97.5% | 35.0% |
| Network-1 Technologies, Inc. ($NTIP) | | 34.6% | 292.9% | -74.7% | 34.4% |
| |
|---|
| Median (66 companies) | | -0.4% | 7.3% | 5.6% | 3.5% |
|---|
| Aerohive Networks, Inc. ($HIVE) | | 10.5% | 12.0% | -9.6% | 0.9% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 82.1% | 82.7% | 83.1% | 83.1% | 83.3% |
| Radware Ltd. ($RDWR) | 82.1% | 82.4% | 81.8% | 81.3% | 82.2% |
| Radcom Ltd. ($RDCM) | 63.2% | 76.8% | 69.6% | 71.8% | 74.0% |
| Casa Systems, Inc. ($CASA) | | 70.8% | 69.1% | 73.4% | 73.4% |
| NetScout Systems, Inc. ($NTCT) | 78.7% | 79.2% | 65.6% | 70.2% | 72.4% |
| |
|---|
| Median (67 companies) | 41.4% | 41.3% | 43.7% | 41.0% | 40.5% |
|---|
| Aerohive Networks, Inc. ($HIVE) | 67.4% | 66.8% | 67.4% | 67.4% | 65.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Network-1 Technologies, Inc. ($NTIP) | 35.5% | 33.7% | 50.6% | 37.8% | 42.8% |
| InterDigital, Inc. ($IDCC) | 50.8% | 58.1% | 73.6% | 67.3% | 41.9% |
| EchoStar Corporation ($SATS) | 25.7% | 39.7% | 40.3% | 38.1% | 37.4% |
| Ubiquiti Networks, Inc. ($UBNT) | 34.7% | 25.5% | 37.3% | 34.3% | 32.8% |
| Ituran Location and Control Ltd. ($ITRN) | 32.4% | 30.5% | 29.9% | 29.9% | 30.4% |
| |
|---|
| Median (65 companies) | 5.6% | 6.1% | 5.9% | 6.5% | 5.4% |
|---|
| Aerohive Networks, Inc. ($HIVE) | -19.1% | -26.0% | -19.6% | -11.9% | -9.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Resonant Inc. ($RESN) | | | 132.5% | 124.8% | 245.2% |
| ViaSat, Inc. ($VSAT) | 22.8% | 26.5% | 26.7% | 33.0% | 32.1% |
| Applied Optoelectronics, Inc. ($AAOI) | 31.5% | 30.1% | 19.0% | 17.5% | 26.9% |
| EchoStar Corporation ($SATS) | 19.7% | 43.8% | 39.9% | 30.9% | 26.5% |
| Finisar Corporation ($FNSR) | 11.3% | 11.9% | 9.4% | 9.7% | 16.8% |
| |
|---|
| Median (65 companies) | 2.3% | 2.3% | 2.0% | 1.9% | 1.7% |
|---|
| Aerohive Networks, Inc. ($HIVE) | 1.7% | 1.5% | 1.3% | 0.4% | 1.6% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 33.9% | 40.8% | 43.1% | 46.9% | 47.9% |
| Ubiquiti Networks, Inc. ($UBNT) | 61.4% | 31.5% | 41.5% | 38.5% | 39.1% |
| Motorola Solutions, Inc. ($MSI) | -16.1% | 18.9% | 26.4% | 39.5% | 35.3% |
| Ituran Location and Control Ltd. ($ITRN) | 50.9% | 46.8% | 50.1% | 48.5% | 35.1% |
| Casa Systems, Inc. ($CASA) | | | 43.2% | 39.7% | 21.9% |
| |
|---|
| Median (70 companies) | 2.1% | 2.3% | 2.4% | 2.2% | 0.7% |
|---|
| Aerohive Networks, Inc. ($HIVE) | -58.1% | -62.0% | -67.1% | -45.1% | -42.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Extreme Networks, Inc. ($EXTR) | | | -2.2x | -1.5x | 7.1x |
| ViaSat, Inc. ($VSAT) | 3.4x | 2.5x | 3.2x | 2.5x | 5.8x |
| CommScope Holding Company, Inc. ($COMM) | 2.3x | 9.6x | 4.3x | 4.6x | 4.4x |
| Inseego Corp. ($INSG) | | | | | 3.9x |
| Finisar Corporation ($FNSR) | -0.3x | 0.2x | -0.5x | 1.6x | 3.8x |
| |
|---|
| Median (46 companies) | -0.7x | -0.7x | -0.9x | -0.7x | -0.1x |
|---|
