Socket Mobile, Inc. reports 106% EBITDA decline in 2018 and 22.7% Revenue decline
02/13/2019 • About Socket Mobile, Inc. (
$SCKT) • By InTwits
Socket Mobile, Inc. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: -0.9% in 2018, 12.8% in 2017, 13.7% in 2016, 12.6% in 2015, 6.9% in 2014
- Socket Mobile, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.8%. At the same time it's in pair with industry average of 3.6%
- CAPEX is quite volatile: $0m in 2018, $0m in 2017, $0m in 2016, $0m in 2015, $0m in 2014
- The company has unprofitable business model: ROIC is -5.7%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.4x while industry average is -2.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Socket Mobile, Inc.'s Revenue dropped on 22.7%. Annual revenue decline showed slowdown in 18Q4 - revenue decreased on 5.5%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 13.8 pp from 12.8% to -0.94% in 2018. During 2014-2018 EBITDA Margin topped in 2016 at 13.7% and was declining since that time.
Gross Margin decreased on 2.1 pp from 53.5% to 51.4% in 2018. Gross Margin stuck to a growing trend at 2.1 pp per annum in the last 5 years. SG&A as a % of Revenue increased on 7.0 pp from 25.8% to 32.8% in 2018. During the last 5 years SG&A as a % of Revenue bottomed in 2016 at 24.0% and was growing since that time.
Net Income margin increased on 3.3 pp from -6.7% to -3.5% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 the company had CAPEX/Revenue of 2.6%. The company's CAPEX/Revenue showed almost no change from 2015 to 2018. It's average level of CAPEX/Revenue for the last three years was 2.0%.
Return on investment
The company operates at negative ROIC (-5.7%) and ROE (-3.9%). ROIC dropped on 22.4 pp from 16.8% to -5.7% in 2018. ROE increased on 4.7 pp from -8.6% to -3.9% in 2018. During the last 5 years ROIC topped in 2015 at 53.1% and was declining since that time.
Leverage (Debt)
Debt level is 1.4x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA jumped on 1.2x from -1.2x to in 2018. Debt surged on 2,435% while cash dropped on 67.9%.
Socket Mobile, Inc. has short term refinancing risk: cash is only 59.7% of short term debt.
Financial and operational results
FY ended 12/31/2018
Socket Mobile, Inc. ($SCKT) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 17.021 | 18.400 | 20.788 | 21.286 | 16.454 | -22.7% |
| Gross Profit | 7.413 | 8.935 | 10.434 | 11.390 | 8.456 | -25.8% |
| SG&A | 4.149 | 4.483 | 4.982 | 5.499 | 5.402 | -1.8% |
| EBITDA | 1.177 | 2.327 | 2.842 | 2.731 | -0.154 | -105.6% |
| Net Income | 0.432 | 1.818 | 12.147 | -1.431 | -0.571 | |
Balance Sheet
|
|---|
| Cash | 0.633 | 0.938 | 1.319 | 3.380 | 1.085 | -67.9% |
| Short Term Debt | 1.822 | 0.905 | 0.792 | 0.055 | 1.817 | 3,180.4% |
| Long Term Debt | 0.372 | 0.372 | 0.026 | 0.029 | 0.333 | 1,032.0% |
Cash flow
|
|---|
| Capex | 0.166 | 0.391 | 0.304 | 0.413 | 0.424 | 2.7% |
Ratios
|
|---|
| Revenue growth | 8.7% | 8.1% | 13.0% | 2.4% | -22.7% | |
| EBITDA growth | 641.8% | 97.6% | 22.2% | -3.9% | -105.6% | |
|
|---|
| Gross Margin | 43.6% | 48.6% | 50.2% | 53.5% | 51.4% | -2.1% |
| EBITDA Margin | 6.9% | 12.6% | 13.7% | 12.8% | -0.9% | -13.8% |
| SG&A, % of revenue | 24.4% | 24.4% | 24.0% | 25.8% | 32.8% | 7.0% |
| Net Income Margin | 2.5% | 9.9% | 58.4% | -6.7% | -3.5% | 3.3% |
| CAPEX, % of revenue | 1.0% | 2.1% | 1.5% | 1.9% | 2.6% | 0.6% |
|
|---|
| ROIC | 32.4% | 53.1% | 23.5% | 16.8% | -5.7% | -22.4% |
| ROE | 74.4% | 83.1% | 124.5% | -8.6% | -3.9% | 4.7% |
| Net Debt/EBITDA | 1.3x | 0.1x | -0.2x | -1.2x | |
Socket Mobile, Inc. ($SCKT) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 4 | 4 | 4 | 4 | | -29.2% | -27.8% | -24.5% | -5.5% |
| EBITDA | -0 | -0 | 0 | -0 | | -125.9% | -103.8% | -89.9% | -106.1% |
| Net Income | -0 | -0 | -0 | -0 | | -158.3% | -128.2% | -110.9% | |
Balance Sheet
|
|---|
| Cash | 2 | 1 | 1 | 1 | | 27.9% | -39.3% | -53.8% | -67.9% |
| Short Term Debt | 0 | 2 | 2 | 2 | | -92.9% | 98.9% | 3,661.6% | 3,180.4% |
| Long Term Debt | 0 | 0 | 0 | 0 | | -27.9% | -26.1% | 1,410.7% | 1,032.0% |
Ratios
|
|---|
| Gross Margin | 51.9% | 50.9% | 52.6% | 50.3% | | 0.0% | -2.7% | -3.0% | -2.7% |
| EBITDA Margin | -4.9% | -0.9% | 2.1% | -0.2% | | -18.1% | -17.9% | -13.5% | -3.5% |
| Net Income Margin | -5.7% | -3.3% | -1.1% | -3.9% | | -12.5% | -11.7% | -8.7% | 58.1% |
Peers in Technology Hardware, Storage &
Below we provide Socket Mobile, Inc. benchmarking against other companies in Technology Hardware, Storage & 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 |
|---|
| Crossroads Systems Inc ($CRSS) | | -90.6% | -35.5% | -89.5% | 39,959.5% |
| Immersion Corporation ($IMMR) | | 19.8% | -9.9% | -38.7% | 217.0% |
| Veritec Inc ($VRTC) | | -42.2% | -28.0% | -52.2% | 53.1% |
| Boxlight Corporation ($BOXL) | | -88.5% | 503.2% | 26.4% | 47.0% |
| Pure Storage, Inc. ($PSTG) | | 308.2% | 152.4% | 67.9% | 38.6% |
| |
|---|
| Median (30 companies) | -16.9% | -3.3% | -5.0% | 1.5% | 5.6% |
|---|
| Socket Mobile, Inc. ($SCKT) | | 8.1% | 13.0% | 2.4% | -22.7% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Immersion Corporation ($IMMR) | 99.1% | 99.3% | 99.7% | 99.4% | 99.8% |
| Pure Storage, Inc. ($PSTG) | 43.5% | 55.5% | 61.9% | 65.9% | 65.5% |
| NetApp, Inc. ($NTAP) | 62.0% | 62.6% | 60.8% | 61.3% | 62.7% |
| Avid Technology, Inc. ($AVID) | 61.4% | 60.9% | 65.0% | 57.8% | 57.9% |
| Datasea Inc ($DTSS) | | | | 39.3% | 54.4% |
| |
|---|
| Median (29 companies) | 35.6% | 35.0% | 38.5% | 38.9% | 38.3% |
|---|
| Socket Mobile, Inc. ($SCKT) | 43.6% | 48.6% | 50.2% | 53.5% | 51.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Immersion Corporation ($IMMR) | 12.3% | 9.0% | -25.1% | -127.0% | 48.6% |
| Apple Inc. ($AAPL) | 33.1% | 35.3% | 32.7% | 31.2% | 30.8% |
| Western Digital Corporation ($WDC) | 20.1% | 18.7% | 12.5% | 21.4% | 27.5% |
| NetApp, Inc. ($NTAP) | 16.9% | 16.7% | 11.3% | 15.4% | 22.9% |
| Seagate Technology PLC ($STX) | 19.3% | 21.1% | 11.3% | 16.7% | 20.0% |
| |
|---|
| Median (29 companies) | 8.6% | 6.2% | 3.8% | 3.5% | 7.9% |
|---|
| Socket Mobile, Inc. ($SCKT) | 6.9% | 12.6% | 13.7% | 12.8% | -0.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Hewlett Packard Enterprise Company ($HPE) | 6.6% | 6.4% | 10.8% | 10.9% | 9.6% |
| Pure Storage, Inc. ($PSTG) | 28.7% | 24.2% | 8.9% | 10.4% | 6.3% |
| 3D Systems Corporation ($DDD) | 3.5% | 3.4% | 2.6% | 4.8% | 5.9% |
| Apple Inc. ($AAPL) | 5.2% | 4.8% | 5.9% | 5.4% | 5.0% |
| Western Digital Corporation ($WDC) | 4.2% | 4.2% | 4.5% | 3.0% | 4.0% |
| |
|---|
| Median (29 companies) | 2.7% | 3.0% | 2.0% | 1.8% | 2.2% |
|---|
| Socket Mobile, Inc. ($SCKT) | 1.0% | 2.1% | 1.5% | 1.9% | 2.6% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Avid Technology, Inc. ($AVID) | | | | | 252.4% |
| Ionix Technology Inc ($IINX) | | | | 23.9% | 204.5% |
| Immersion Corporation ($IMMR) | 7.6% | 5.8% | -21.5% | -138.9% | 96.8% |
| HP Inc. ($HPQ) | 8.0% | 8.7% | 15.8% | 60.8% | 72.9% |
| NetApp, Inc. ($NTAP) | 12.5% | 14.8% | 7.3% | 14.0% | 28.1% |
| |
|---|
| Median (37 companies) | 5.9% | 5.0% | -2.6% | 0.2% | 3.6% |
|---|
| Socket Mobile, Inc. ($SCKT) | 32.4% | 53.1% | 23.5% | 16.8% | -5.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| CPI Card Group Inc. ($PMTS) | 3.4x | 3.5x | 5.8x | | 12.4x |
| NCR Corporation ($NCR) | 4.9x | 6.6x | 2.7x | 2.3x | 5.2x |
| Avid Technology, Inc. ($AVID) | -0.7x | 3.1x | 1.7x | 5.6x | 4.8x |
| Xerox Corporation ($XRX) | 3.5x | 3.5x | 3.1x | 3.0x | 3.0x |
| Electronics for Imaging, Inc. ($EFII) | -0.2x | 1.4x | 1.3x | 1.6x | 1.7x |
| |
|---|
| Median (20 companies) | -0.4x | 0.6x | 0.4x | 0.5x | 0.6x |
|---|
