Aware, Inc. EBITDA dropped on 64.6% and Revenue decreased slightly on 0.93%
02/12/2019 • About Aware, Inc. (
$AWRE) • By InTwits
Aware, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 5.1% in 2018, 14.3% in 2017, 30.3% in 2016, 23.2% in 2015, 32.2% in 2014
- Aware, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.7%.
- The company has potentially unprofitable business model: ROIC is 0.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Aware, Inc.'s Revenue decreased slightly on 0.93%. Annual revenue decline showed slowdown in 18Q4 - revenue surged on 23.5%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 9.2 pp from 14.3% to 5.1% in 2018. EBITDA Margin declined at -6.3 pp per annum in 2014-2018.
Gross Margin decreased on 2.3 pp from 94.6% to 92.3% in 2018. During the last 5 years Gross Margin topped in 2017 at 94.6%. SG&A as a % of Revenue increased slightly on 0.82 pp from 45.5% to 46.3% in 2018. SG&A as a % of Revenue followed a growing trend at 3.8 pp per annum in the last 5 years.
Net Income margin showed almost no change in 2018. During the last 5 years Net Income margin topped in 2015 at 23.5% and was declining since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 1.3% in 2018. CAPEX/Revenue increased slightly on 0.63 pp from 0.65% in 2015 to 1.3% in 2018. Average CAPEX/Revenue for the last three years was 0.73%.
Return on investment
The company operates at low ROIC (0.6%) and ROE (2.0%). ROIC decreased on 2.5 pp from 3.1% to 0.63% in 2018. ROE showed almost no change in 2018. During the last 5 years ROE topped in 2015 at 8.5% and was declining since that time.
Leverage (Debt)
The company has no debt. Cash showed almost no change in 2018.
Valuation and dividends
Aware, Inc.'s trades at EV/EBITDA 31.9x and P/E 63.2x.
Management team
Aware, Inc.'s CEO is Kevin T Russell. Kevin T Russell is a founder and has 8 years tenure with the company. Aware, Inc.'s CFO David J Martin "Dave" has spent 2 years with the company.
Financial and operational results
FY ended 12/31/2018
Aware, Inc. ($AWRE) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 23.720 | 19.621 | 21.566 | 16.282 | 16.131 | -0.9% |
| Gross Profit | 17.876 | 17.114 | 19.465 | 15.407 | 14.891 | -3.3% |
| SG&A | 7.409 | 7.442 | 7.428 | 7.410 | 7.474 | 0.9% |
| EBITDA | 7.630 | 4.555 | 6.530 | 2.328 | 0.824 | -64.6% |
| Net Income | 4.583 | 4.614 | 4.103 | 1.282 | 1.233 | -3.8% |
Balance Sheet
|
|---|
| Cash | 43.985 | 51.232 | 51.913 | 51.608 | 51.612 | 0.0% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 0.135 | 0.127 | 0.087 | 0.082 | 0.206 | 151.2% |
Ratios
|
|---|
| Revenue growth | 22.5% | -17.3% | 9.9% | -24.5% | -0.9% | |
| EBITDA growth | 32.1% | -40.3% | 43.4% | -64.3% | -64.6% | |
|
|---|
| Gross Margin | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% | -2.3% |
| EBITDA Margin | 32.2% | 23.2% | 30.3% | 14.3% | 5.1% | -9.2% |
| SG&A, % of revenue | 31.2% | 37.9% | 34.4% | 45.5% | 46.3% | 0.8% |
| Net Income Margin | 19.3% | 23.5% | 19.0% | 7.9% | 7.6% | -0.2% |
| CAPEX, % of revenue | 0.6% | 0.6% | 0.4% | 0.5% | 1.3% | 0.8% |
|
|---|
| ROIC | 10.3% | 7.2% | 10.4% | 3.1% | 0.6% | -2.5% |
| ROE | 6.7% | 8.5% | 7.2% | 2.2% | 2.0% | -0.2% |
| Net Debt/EBITDA | -5.8x | -11.2x | -7.9x | -22.2x | -62.6x | -40.5x |
Aware, Inc. ($AWRE) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 3 | 4 | 5 | 4 | | -30.0% | 47.9% | -5.4% | 23.5% |
| EBITDA | -1 | -0 | 1 | 0 | | -269.3% | -242.7% | -22.9% | |
| Net Income | -0 | -0 | 1 | 1 | | -264.5% | -264.9% | 11.5% | |
Balance Sheet
|
|---|
| Cash | 51 | 49 | 49 | 52 | | 3.4% | -0.6% | -0.3% | 0.0% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 98.3% | 90.2% | 93.7% | 88.2% | | 9.4% | -5.7% | -2.7% | -8.7% |
| EBITDA Margin | -20.6% | -7.3% | 23.1% | 11.1% | | -29.2% | -14.8% | -5.3% | 21.7% |
| Net Income Margin | -17.0% | -5.0% | 23.6% | 15.7% | | -24.2% | -9.5% | 3.6% | 33.4% |
Peers in Application Software
Below you can find Aware, 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 ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 14.0% | 14.3% | 15.7% | 15.2% |
|---|
| Aware, Inc. ($AWRE) | | -17.3% | 9.9% | -24.5% | -0.9% |
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% |
| 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% |
| Datawatch Corporation ($DWCH) | 79.0% | 79.7% | 83.6% | 88.3% | 88.2% |
| |
|---|
| Median (150 companies) | 62.8% | 61.7% | 63.8% | 64.4% | 65.7% |
|---|
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
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. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.3% | -10.7% | -5.3% | -4.2% | -3.3% |
|---|
| Aware, Inc. ($AWRE) | 32.2% | 23.2% | 30.3% | 14.3% | 5.1% |
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. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 3.0% | 2.3% | 2.4% |
|---|
| Aware, Inc. ($AWRE) | 0.6% | 0.6% | 0.4% | 0.5% | 1.3% |
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. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.4% | -13.1% | -9.8% | -11.8% | -10.4% |
|---|
| Aware, Inc. ($AWRE) | 10.3% | 7.2% | 10.4% | 3.1% | 0.6% |
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. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (69 companies) | -1.2x | -0.9x | -0.9x | -0.8x | -0.6x |
|---|
| Aware, Inc. ($AWRE) | -5.8x | -11.2x | -7.9x | -22.2x | -62.6x |
