Ellie Mae, Inc. reports 57.3% Net Income decline in 2018 while 15.2% Revenue growth
02/14/2019 • About Ellie Mae, Inc. (
$ELLI) • By InTwits
Ellie Mae, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Ellie Mae, Inc. is a fast growth stock: 2018 revenue growth was 15.2%, 5 year revenue CAGR was 30.2% at 2018 ROIC 1.4%
- Ellie Mae, Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 is 7.6%. Average EBITDA Margin for the same period was 19.8%. In 2018 SBC/Revenue was even higher: 8.3%
- Ellie Mae, Inc. has high CAPEX intensity: 5 year average CAPEX/Revenue was 18.0%. At the same time it's a lot of higher than industry average of 13.3%.
- CAPEX is quite volatile: $93m in 2018, $88m in 2017, $60m in 2016, $52m in 2015, $20m in 2014
- The company has potentially unprofitable business model: ROIC is 1.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Ellie Mae, Inc.'s Revenue surged on 15.2%. Revenue growth showed slowdown in 18Q4 - it was 2.8% YoY. During the last 5 years Revenue growth topped in 2015 at 57.2% and was decelerating since that time. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 3.9 pp from 21.1% to 17.2% in 2018. During 2014-2018 EBITDA Margin topped in 2016 at 22.6% and was declining since that time.
Gross Margin decreased on 3.0 pp from 61.4% to 58.4% in 2018. Gross Margin stuck to a declining trend at -3.1 pp per annum in 2014-2018. SG&A as a % of Revenue increased on 3.0 pp from 34.7% to 37.8% in 2018. During the last 5 years SG&A as a % of Revenue bottomed in 2017 at 34.7%. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in 2018.
Net Income margin decreased on 8.0 pp from 12.7% to 4.7% in 2018.
Investments (CAPEX, working capital and M&A)
Ellie Mae, Inc.'s CAPEX/Revenue was 19.4% in 2018. CAPEX/Revenue decreased slightly on 1.2 pp from 20.6% in 2015 to 19.4% in 2018. Average CAPEX/Revenue for the last three years was 19.1%. To fuel its fast growth Ellie Mae, Inc. made large investments to CAPEX (113% of EBITDA).
Accounts receivable as a % of Revenue decreased slightly on 1.2 pp from 10.3% to 9.1% in 2018. Accounts payable as a % of Revenue decreased on 6.2 pp from 15.5% to 9.3% in 2018.
Return on investment
The company operates at low ROIC (1.4%) and ROE (2.9%). ROIC decreased on 4.6 pp from 6.0% to 1.4% in 2018. ROE decreased on 4.7 pp from 7.6% to 2.9% in 2018. During the last 5 years ROIC topped in 2015 at 12.3% and was declining since that time. During the last 5 years ROE topped in 2015 at 8.2% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is -2.2x and Debt / EBITDA is 0.0x. Debt surged on 239% while cash surged on 32.0%.
Ellie Mae, Inc. has no short term refinancing risk: cash is higher than short term debt (140,850.4%).
Valuation and dividends
Ellie Mae, Inc.'s trades at EV/EBITDA 38.6x and P/E 149.3x.
Management team
CEO total compensation was
$5,792,488 in 2018 which included
$475,000 salary.
Insider ownership is 0.21%. Insider ownership didn't change in 2018.
At the end of financial year the company had 1,570 employees. The number of employees increased on 6.1%. Average revenue per employee in 2018 was
$305,902 and it increased on 8.6%.
Financial and operational results
FY ended 12/31/2018
Ellie Mae, Inc. ($ELLI) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 161.5 | 253.9 | 360.3 | 417.0 | 480.3 | 15.2% |
| Gross Profit | 115.3 | 169.7 | 240.1 | 256.1 | 280.3 | 9.5% |
| SG&A | 65.9 | 95.4 | 126.0 | 144.7 | 181.3 | 25.3% |
| EBITDA | 29.5 | 49.9 | 81.6 | 88.1 | 82.5 | -6.3% |
| EBIT | 21.1 | 33.9 | 55.6 | 42.1 | 10.9 | -74.2% |
| Interest expence | 0.1 | 0.1 | | | | |
| Tax | 6.8 | 12.2 | 18.8 | -7.5 | -7.8 | |
| Net Income | 14.8 | 22.3 | 37.8 | 52.9 | 22.6 | -57.3% |
| Stock Based Compensation | 8.7 | 12.9 | 31.5 | 34.5 | 40.0 | 16.0% |
Balance Sheet
|
|---|
| Cash | 26.8 | 34.4 | 380.9 | 137.7 | 181.7 | 32.0% |
| Accounts Receivable | 20.4 | 28.6 | 39.4 | 43.1 | 43.9 | 1.8% |
| Accounts Payable | 6.7 | 9.9 | 15.9 | 24.9 | 18.5 | -25.6% |
| Short Term Debt | 0.4 | 3.8 | 0.6 | 0.1 | 0.1 | 51.8% |
| Long Term Debt | 0.4 | 0.7 | 0.1 | 0.0 | 0.2 | |
Cash flow
|
|---|
| Capex | 19.8 | 52.4 | 60.3 | 87.9 | 93.2 | 6.0% |
| Acquisitions | 34.6 | 16.4 | | 119.3 | | |
Ratios
|
|---|
| Revenue growth | 25.7% | 57.2% | 41.9% | 15.8% | 15.2% | |
| EBITDA growth | 17.4% | 69.1% | 63.6% | 8.0% | -6.3% | |
|
|---|
| Gross Margin | 71.3% | 66.8% | 66.7% | 61.4% | 58.4% | -3.0% |
| EBITDA Margin | 18.3% | 19.6% | 22.6% | 21.1% | 17.2% | -3.9% |
| EBIT Margin | 13.1% | 13.3% | 15.4% | 10.1% | 2.3% | -7.8% |
| SG&A, % of revenue | 40.8% | 37.6% | 35.0% | 34.7% | 37.8% | 3.0% |
| SBC, % of revenue | 5.4% | 5.1% | 8.7% | 8.3% | 8.3% | 0.1% |
| Net Income Margin | 9.2% | 8.8% | 10.5% | 12.7% | 4.7% | -8.0% |
| CAPEX, % of revenue | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% | -1.7% |
|
|---|
| ROIC | 9.2% | 12.3% | 11.6% | 6.0% | 1.4% | -4.6% |
| ROE | 6.4% | 8.2% | 8.0% | 7.6% | 2.9% | -4.7% |
| Net Debt/EBITDA | -0.9x | -0.6x | -4.7x | -1.6x | -2.2x | -0.6x |
| Interest expence / Average debt | 8.0% | 3.4% | | | | |
People
|
|---|
| Insider ownership | 0.2% | 0.2% | 0.2% | 0.2% | 0.2% | 0.0% |
| Employees | 640 | 857 | 1,069 | 1,480 | 1,570 | 6.1% |
| Revenue/Employee, th. $ | 252 | 296 | 337 | 282 | 306 | 8.6% |
Ellie Mae, Inc. ($ELLI) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 118 | 125 | 123 | 116 | | 26.8% | 20.1% | 14.9% | 2.8% |
| EBITDA | 14 | 23 | 30 | 16 | | 11.2% | -14.2% | 5.8% | -15.9% |
| Net Income | 2 | 9 | 12 | 0 | | -77.0% | -49.5% | -14.5% | -99.2% |
Balance Sheet
|
|---|
| Cash | 117 | 118 | 134 | 182 | | -65.0% | -44.5% | -45.9% | 32.0% |
| Short Term Debt | 0 | 0 | 0 | 0 | | -100.0% | | | 51.8% |
| Long Term Debt | 0 | 0 | 0 | 0 | | -100.0% | -100.0% | | |
Ratios
|
|---|
| Gross Margin | 58.1% | 58.7% | 58.3% | 57.6% | | -4.5% | -4.6% | -4.7% | 0.4% |
| EBITDA Margin | 12.2% | 18.7% | 24.7% | 14.0% | | -1.7% | -7.5% | -2.1% | -3.1% |
| Net Income Margin | 1.9% | 7.6% | 10.1% | 0.1% | | -8.5% | -10.5% | -3.5% | -8.7% |
Peers in Application Software
Below you can find Ellie Mae, 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 ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 13.5% | 13.6% | 14.8% | 15.2% |
|---|
| Ellie Mae, Inc. ($ELLI) | | 57.2% | 41.9% | 15.8% | 15.2% |
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. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 62.8% | 61.7% | 63.8% | 64.6% | 66.1% |
|---|
| Ellie Mae, Inc. ($ELLI) | 71.3% | 66.8% | 66.7% | 61.4% | 58.4% |
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. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.3% | -10.7% | -5.3% | -4.2% | -3.3% |
|---|
| Ellie Mae, Inc. ($ELLI) | 18.3% | 19.6% | 22.6% | 21.1% | 17.2% |
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% |
| Veritone, Inc. ($VERI) | | 0.2% | 0.4% | 4.6% | 13.7% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 2.9% | 2.3% | 2.4% |
|---|
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
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. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.4% | -13.1% | -9.8% | -11.8% | -10.4% |
|---|
| Ellie Mae, Inc. ($ELLI) | 9.2% | 12.3% | 11.6% | 6.0% | 1.4% |
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. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (69 companies) | -1.4x | -1.0x | -0.9x | -0.8x | -0.6x |
|---|
| Ellie Mae, Inc. ($ELLI) | -0.9x | -0.6x | -4.7x | -1.6x | -2.2x |
