OneSpan Inc. EBITDA dropped on 27.6% while Revenue increased on 9.8%
02/19/2019 • About OneSpan Inc. (
$OSPN) • By InTwits
OneSpan Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is declining: 5.7% in 2018 vs. 8.7% in 2017 vs. 22.0% in 2014
- EBITDA Margin is quite volatile: 5.7% in 2018, 8.7% in 2017, 10.6% in 2016, 23.5% in 2015, 22.0% in 2014
- OneSpan Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.1%. At the same time it's a lot of higher than industry average of 3.6%.
- CAPEX is quite volatile: $4m in 2018, $3m in 2017, $2m in 2016, $1m in 2015, $1m in 2014
- The company has potentially unprofitable business model: ROIC is 0.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 9.8%. Revenue growth showed acceleration in 18Q4 - it increased 18.9% YoY. During 2014-2018 Revenue growth bottomed in 2016 at -20.4% and was accelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.63 pp from 3.1% to 3.7% in 2018. EBITDA Margin stuck to a declining trend at -4.7 pp per annum in the last 5 years.
Gross Margin showed almost no change in 2018. SG&A as a % of Revenue showed almost no change in 2018. SG&A as a % of Revenue followed a growing trend at 5.5 pp per annum in the last 5 years.
Net Income margin surged on 13.4 pp from -11.6% to 1.8% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 the company had CAPEX/Revenue of 1.7%. CAPEX/Revenue increased slightly on 1.2 pp from 0.56% in 2015 to 1.7% in 2018. Average CAPEX/Revenue for the last three years was 1.5%. CAPEX as a % of Revenue stuck to a growing trend at 0.31 pp per annum in the last 5 years.
Return on investment
The company operates at low ROIC (0.0%) and ROE (1.6%). ROIC decreased on 2.5 pp from 2.5% to 0.0096% in 2018. ROE jumped on 10.7 pp from -9.1% to 1.6% in 2018. ROIC stuck to a declining trend at -6.0 pp per annum in 2014-2018.
Leverage (Debt)
The company has no debt. Cash decreased on 2.5%.
Valuation and dividends
The company's trades at EV/EBITDA 63.7x and P/E 221.3x.
Management team
OneSpan Inc.'s CEO is Scott M Clements. Scott M Clements is a founder and has 1 year tenure with the company. Mark Hoyt is a OneSpan Inc.'s CFO. Mark Hoyt has spent 1 year at the company.
Financial and operational results
FY ended 12/31/2018
OneSpan Inc. ($OSPN) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 201.5 | 241.4 | 192.3 | 193.3 | 212.3 | 9.8% |
| Gross Profit | 127.8 | 143.5 | 130.7 | 134.5 | 147.5 | 9.6% |
| SG&A | 65.6 | 70.7 | 89.0 | 96.4 | 105.4 | 9.3% |
| EBITDA | 44.2 | 56.8 | 20.4 | 16.8 | 12.2 | -27.6% |
| Net Income | 33.5 | 42.2 | 10.5 | -22.4 | 3.8 | |
Balance Sheet
|
|---|
| Cash | 72.4 | 78.5 | 49.3 | 78.7 | 76.7 | -2.5% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 1.5 | 1.4 | 2.0 | 3.1 | 3.7 | 19.3% |
Ratios
|
|---|
| Revenue growth | 30.0% | 19.8% | -20.4% | 0.5% | 9.8% | |
| EBITDA growth | 135.9% | 28.3% | -64.1% | -17.6% | -27.6% | |
|
|---|
| Gross Margin | 63.4% | 59.5% | 67.9% | 69.6% | 69.5% | -0.1% |
| EBITDA Margin | 22.0% | 23.5% | 10.6% | 8.7% | 5.7% | -3.0% |
| SG&A, % of revenue | 32.6% | 29.3% | 46.3% | 49.9% | 49.6% | -0.2% |
| Net Income Margin | 16.6% | 17.5% | 5.5% | -11.6% | 1.8% | 13.4% |
| CAPEX, % of revenue | 0.7% | 0.6% | 1.1% | 1.6% | 1.7% | 0.1% |
|
|---|
| ROIC | 20.0% | 22.5% | 3.9% | 2.5% | 0.0% | -2.5% |
| ROE | 17.6% | 18.6% | 4.2% | -9.1% | 1.6% | 10.7% |
| Net Debt/EBITDA | -1.6x | -1.4x | -2.4x | -4.7x | -6.3x | -1.6x |
OneSpan Inc. ($OSPN) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 45 | 50 | 52 | 65 | | 8.3% | 8.4% | 2.7% | 18.9% |
| EBITDA | 4 | 1 | -0 | 7 | | 49.7% | -70.2% | -100.9% | 84.6% |
| Net Income | 2 | -1 | -1 | 4 | | 212.7% | -1,010.9% | -133.0% | |
Balance Sheet
|
|---|
| Cash | 126 | 101 | 92 | 77 | | 124.7% | 79.8% | 86.6% | -2.5% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 76.4% | 72.6% | 65.8% | 65.2% | | 5.1% | 2.5% | -5.9% | -0.7% |
| EBITDA Margin | 9.7% | 1.3% | -0.1% | 11.1% | | 2.7% | -3.5% | -15.3% | 3.9% |
| Net Income Margin | 3.9% | -2.0% | -1.7% | 6.1% | | 2.6% | -2.3% | -7.1% | 53.5% |
Peers in Systems Software
Below we provide OneSpan Inc. benchmarking against other companies in Systems Software 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 |
|---|
| Advantego Corp ($ADGO) | | | | | 973.8% |
| Solbright Group Inc ($SBRT) | | | 286.4% | 25.4% | 414.0% |
| Duos Technologies Group Inc ($DUOT) | | 61.0% | -9.8% | -36.4% | 210.2% |
| Dell Technologies Inc. ($DVMT) | | | | | 145.7% |
| Finjan Holdings, Inc. ($FNJN) | | -6.2% | 292.3% | 174.6% | 63.0% |
| |
|---|
| Median (48 companies) | | 19.0% | 14.7% | 16.6% | 20.4% |
|---|
| OneSpan Inc. ($OSPN) | | 19.8% | -20.4% | 0.5% | 9.8% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| StrikeForce Technologies Inc ($SFOR) | 97.0% | 96.9% | 98.3% | 95.4% | 94.0% |
| Varonis Systems, Inc. ($VRNS) | 90.2% | 90.6% | 90.5% | 90.4% | 89.8% |
| Check Point Software Technologies Ltd. ($CHKP) | 88.2% | 88.5% | 88.5% | 88.6% | 89.6% |
| Tableau Software, Inc. ($DATA) | 91.0% | 88.7% | 88.0% | 87.1% | 87.7% |
| Attunity Ltd. ($ATTU) | 90.7% | 84.9% | 83.9% | 84.1% | 87.5% |
| |
|---|
| Median (53 companies) | 77.0% | 75.4% | 73.6% | 74.1% | 75.0% |
|---|
| OneSpan Inc. ($OSPN) | 63.4% | 59.5% | 67.9% | 69.6% | 69.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Check Point Software Technologies Ltd. ($CHKP) | 54.3% | 52.4% | 49.8% | 50.7% | 48.8% |
| SolarWinds Corporation ($SWI) | | | -8.0% | 44.0% | 44.8% |
| Finjan Holdings, Inc. ($FNJN) | -192.1% | -295.2% | 2.2% | 30.2% | 42.0% |
| Oracle Corporation ($ORCL) | 46.2% | 43.8% | 40.8% | 40.2% | 40.8% |
| CA Inc. ($CA) | 33.9% | 36.7% | 37.2% | 36.1% | 35.3% |
| |
|---|
| Median (47 companies) | -2.4% | -6.6% | -9.8% | -5.4% | -4.7% |
|---|
| OneSpan Inc. ($OSPN) | 22.0% | 23.5% | 10.6% | 8.7% | 5.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| The Rubicon Project, Inc. ($RUBI) | 15.6% | 11.4% | 12.0% | 26.0% | 16.0% |
| CYREN Ltd. ($CYRN) | 2.4% | 4.4% | 3.2% | 5.8% | 9.2% |
| ServiceNow, Inc. ($NOW) | 8.0% | 8.7% | 7.6% | 7.8% | 8.6% |
| Qualys, Inc. ($QLYS) | 10.4% | 12.2% | 11.7% | 16.4% | 8.2% |
| Zscaler, Inc. ($ZS) | | 12.5% | 7.8% | 6.5% | 8.0% |
| |
|---|
| Median (48 companies) | 2.9% | 2.2% | 2.1% | 2.4% | 2.6% |
|---|
| OneSpan Inc. ($OSPN) | 0.7% | 0.6% | 1.1% | 1.6% | 1.7% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Finjan Holdings, Inc. ($FNJN) | -42.6% | -113.5% | 3.4% | 46.6% | 64.1% |
| Fortinet, Inc. ($FTNT) | 9.2% | 2.1% | 5.3% | 15.0% | 28.0% |
| Check Point Software Technologies Ltd. ($CHKP) | 22.2% | 23.7% | 24.7% | 26.8% | 25.5% |
| MAM Software Group, Inc. ($MAMS) | 13.3% | 19.3% | 21.1% | 24.2% | 25.2% |
| Red Hat, Inc. ($RHT) | 15.1% | 14.1% | 14.2% | 16.4% | 22.4% |
| |
|---|
| Median (56 companies) | 0.0% | 0.0% | -4.3% | -4.7% | -1.9% |
|---|
| OneSpan Inc. ($OSPN) | 20.0% | 22.5% | 3.9% | 2.5% | 0.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| NXT-ID Inc. ($NXTD) | | | | | 9.7x |
| Symantec Corporation ($SYMC) | -3.2x | -1.5x | -5.0x | 10.0x | 4.7x |
| SolarWinds Corporation ($SWI) | | | | 6.2x | 4.1x |
| Oracle Corporation ($ORCL) | 0.4x | 1.2x | 1.6x | 2.4x | 2.4x |
| ServiceNow, Inc. ($NOW) | | | | 9.0x | 0.9x |
| |
|---|
| Median (22 companies) | -2.7x | -1.5x | -1.0x | -0.3x | -0.4x |
|---|
| OneSpan Inc. ($OSPN) | -1.6x | -1.4x | -2.4x | -4.7x | -6.3x |
