Infinera Corporation revenue surged on 27.4% and EBITDA Margin increased on 6.8 pp from -15.8% to -9.0%
02/21/2019 • About Infinera Corporation (
$INFN) • By InTwits
Infinera Corporation reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- Infinera Corporation is a growth stock: FY2018 revenue growth was 27.4%, 5 year revenue CAGR was 11.6% at FY2018 ROIC -19.1%
- The company operates at negative EBITDA Margin: -9.0%
- Infinera Corporation spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 is 0.0%. Average EBITDA Margin for the same period was -0.4%
- Infinera Corporation has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.0%. At the same time it's in pair with industry average of 3.6%
- CAPEX is quite volatile: $11m in 2018, $9m in 2017, $8m in 2016, $14m in 2015, $19m in 2014
- The company has unprofitable business model: ROIC is -19.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Infinera Corporation's Revenue jumped on 27.4%. Revenue growth showed acceleration in FY18Q4 - it increased 69.6% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 0.63 pp from 3.1% to 3.7% in 2018.
Gross Margin increased slightly on 1.1 pp from 32.9% to 34.0% in FY2018. SG&A as a % of Revenue decreased on 3.5 pp from 25.2% to 21.8% in FY2018.
Net Income margin increased on 3.5 pp from -26.3% to -22.7% in FY2018. Net Income margin stuck to a declining trend at -8.2 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 4.0% in FY2018. The company showed small CAPEX/Revenue decline of 0.74 pp from 4.7% in FY2015 to 4.0% in FY2018. It's average CAPEX/Revenue for the last three years was 5.6%. During FY2014-FY2018 CAPEX as a % of Revenue topped in FY2017 at 7.8%.
Return on investment
The company operates at negative ROIC (-19.1%) and ROE (-31.3%). ROIC increased on 2.6 pp from -21.7% to -19.1% in FY2018. ROE decreased on 4.1 pp from -27.2% to -31.3% in FY2018. ROIC followed a declining trend at -8.0 pp per annum in the last 5 years. ROE stuck to a declining trend at -10.4 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is -0.9x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA didn't change in FY2018. Debt surged on 218% while cash jumped on 74.4%.
The company has no short term refinancing risk: short term debt is zero.
Management team
The company's CEO is Thomas J Fallon "Tom". Thomas J Fallon "Tom" is a founder and has 9 years tenure with the company. Brad D Feller is a Infinera Corporation's CFO. Brad D Feller has spent 5 years at the company.
Financial and operational results
FY ended 12/29/2018
Infinera Corporation ($INFN) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 668.1 | 886.7 | 870.1 | 740.7 | 943.4 | 27.4% |
| Gross Profit | 288.3 | 403.5 | 393.7 | 244.0 | 321.2 | 31.6% |
| SG&A | 127.5 | 163.0 | 187.2 | 186.7 | 205.2 | 9.9% |
| EBITDA | 53.3 | 95.5 | 35.7 | -117.1 | -85.2 | |
| Net Income | 13.7 | 51.4 | -23.9 | -194.5 | -214.3 | |
Balance Sheet
|
|---|
| Cash | 86.5 | 149.1 | 162.6 | 116.3 | 203.0 | 74.4% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 144.9 | 0.0 | -100.0% |
| Long Term Debt | 116.9 | 123.3 | 133.6 | 0.0 | 460.5 | |
Cash flow
|
|---|
| Capex | 23.1 | 42.0 | 43.3 | 58.0 | 37.7 | -35.1% |
Ratios
|
|---|
| Revenue growth | 22.8% | 32.7% | -1.9% | -14.9% | 27.4% | |
| EBITDA growth | 14,064.6% | 79.3% | -62.6% | -427.8% | -27.2% | |
|
|---|
| Gross Margin | 43.2% | 45.5% | 45.2% | 32.9% | 34.0% | 1.1% |
| EBITDA Margin | 8.0% | 10.8% | 4.1% | -15.8% | -9.0% | 6.8% |
| SG&A, % of revenue | 19.1% | 18.4% | 21.5% | 25.2% | 21.8% | -3.5% |
| Net Income Margin | 2.0% | 5.8% | -2.7% | -26.3% | -22.7% | 3.5% |
| CAPEX, % of revenue | 3.5% | 4.7% | 5.0% | 7.8% | 4.0% | -3.8% |
|
|---|
| ROIC | 6.0% | 8.0% | -2.9% | -21.7% | -19.1% | 2.6% |
| ROE | 3.0% | 8.3% | -3.1% | -27.2% | -31.3% | -4.1% |
| Net Debt/EBITDA | 0.6x | -0.3x | -0.8x | | |
Infinera Corporation ($INFN) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 203 | 208 | 200 | 332 | | 15.5% | 17.8% | 4.1% | 69.6% |
| EBITDA | -8 | -5 | -8 | -64 | | | | | |
| Net Income | -26 | -22 | -33 | -133 | | | | | |
Balance Sheet
|
|---|
| Cash | 151 | 63 | 416 | 203 | | 20.5% | -47.2% | 241.2% | 74.4% |
| Short Term Debt | 148 | 0 | 0 | 0 | | | -100.0% | -100.0% | -100.0% |
| Long Term Debt | 0 | 0 | 263 | 460 | | -100.0% | | | |
Ratios
|
|---|
| Gross Margin | 40.5% | 40.5% | 35.0% | 25.4% | | 4.0% | 3.8% | -0.2% | 1.3% |
| EBITDA Margin | -3.8% | -2.6% | -4.0% | -19.3% | | 8.7% | 10.9% | 5.1% | 8.2% |
| Net Income Margin | -13.0% | -10.5% | -16.3% | -40.2% | | 10.1% | 13.7% | 3.1% | -2.4% |
Peers in Communications Equipment
Below we provide Infinera Corporation benchmarking against other companies in Communications Equipment 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 |
|---|
| 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. ($NTIP) | | 34.6% | 292.9% | -74.7% | 34.4% |
| |
|---|
| Median (66 companies) | | -0.4% | 7.6% | 5.6% | 2.8% |
|---|
| Infinera Corporation ($INFN) | | 32.7% | -1.9% | -14.9% | 27.4% |
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. ($NTCT) | 78.7% | 79.2% | 65.6% | 70.2% | 72.4% |
| |
|---|
| Median (67 companies) | 41.4% | 41.3% | 43.7% | 41.7% | 41.2% |
|---|
| Infinera Corporation ($INFN) | 43.2% | 45.5% | 45.2% | 32.9% | 34.0% |
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. ($ITRN) | 32.4% | 30.5% | 29.9% | 29.9% | 30.4% |
| |
|---|
| Median (65 companies) | 5.3% | 4.7% | 5.9% | 6.5% | 5.4% |
|---|
| Infinera Corporation ($INFN) | 8.0% | 10.8% | 4.1% | -15.8% | -9.0% |
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 ($FNSR) | 11.3% | 11.9% | 9.4% | 9.7% | 16.8% |
| |
|---|
| Median (65 companies) | 2.2% | 2.2% | 1.9% | 1.8% | 1.6% |
|---|
| Infinera Corporation ($INFN) | 3.5% | 4.7% | 5.0% | 7.8% | 4.0% |
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. ($CASA) | | | 43.2% | 39.7% | 21.9% |
| |
|---|
| Median (70 companies) | 1.2% | 2.0% | 2.4% | 2.2% | 0.7% |
|---|
| Infinera Corporation ($INFN) | 6.0% | 8.0% | -2.9% | -21.7% | -19.1% |
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) | -0.8x | -0.8x | -0.9x | -0.7x | -0.1x |
|---|
