The Rubicon Project, Inc. reports 50.7% CAPEX decline in 2018 and 19.8% Revenue decline
02/27/2019 • About The Rubicon Project, Inc. (
$RUBI) • By InTwits
The Rubicon Project, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- The company operates at negative EBITDA Margin: -22.7%
- The Rubicon Project, Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 is 0.0%. Average EBITDA Margin for the same period was -12.0%
- The Rubicon Project, Inc. has high CAPEX intensity: 5 year average CAPEX/Revenue was 16.2%. At the same time it's a lot of higher than industry average of 3.1%.
- CAPEX is quite volatile: $1m in FY2018, $2m in FY2017, $2m in FY2016, $5m in FY2015, $1m in FY2014
- The company has unprofitable business model: ROIC is -45.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The Rubicon Project, Inc.'s Revenue dropped on 19.8%. Annual revenue decline showed slowdown in 18Q4 - revenue jumped on 32.0%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin surged on 55.0 pp from -77.6% to -22.7% in 2018.
Gross Margin dropped on 11.6 pp from 63.5% to 51.9% in 2018. Gross Margin followed a declining trend at -7.6 pp per annum in the last 5 years. SG&A as a % of Revenue increased slightly on 0.72 pp from 69.0% to 69.8% in 2018. During 2014-2018 SG&A as a % of Revenue bottomed in 2016 at 54.6% and was growing since that time.
Net Income margin surged on 49.9 pp from -99.5% to -49.6% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 The Rubicon Project, Inc. had CAPEX/Revenue of 16.0%. CAPEX/Revenue increased on 4.5 pp from 11.4% in 2015 to 16.0% in 2018. For the last three years the average CAPEX/Revenue was 18.0%.
Return on investment
The company operates at negative ROIC (-45.0%) and ROE (-43.7%). ROIC jumped on 22.6 pp from -67.6% to -45.0% in 2018. ROE surged on 23.0 pp from -66.7% to -43.7% in 2018.
Leverage (Debt)
The company has no debt. Cash increased on 5.0%.
Management team
The Rubicon Project, Inc.'s CEO Michael G Barrett is a founder and has spent 2 years with the company. The Rubicon Project, Inc.'s CFO is David L Day. David L Day has 2 years tenure at the company.
Financial and operational results
FY ended 12/31/2018
The Rubicon Project, Inc. ($RUBI) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 125.3 | 248.5 | 278.2 | 155.5 | 124.7 | -19.8% |
| Gross Profit | 104.5 | 190.0 | 205.0 | 98.7 | 64.7 | -34.5% |
| SG&A | 100.6 | 153.5 | 151.9 | 107.4 | 87.0 | -19.0% |
| EBITDA | -6.3 | 25.4 | 17.9 | -120.8 | -28.3 | |
| Net Income | -18.7 | 0.4 | -18.1 | -154.8 | -61.8 | |
Balance Sheet
|
|---|
| Cash | 97.2 | 116.5 | 149.4 | 76.6 | 80.5 | 5.0% |
| Short Term Debt | 0.1 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 19.5 | 28.4 | 33.4 | 40.4 | 19.9 | -50.7% |
Ratios
|
|---|
| Revenue growth | 49.5% | 98.3% | 12.0% | -44.1% | -19.8% | |
| EBITDA growth | -237.4% | -505.9% | -29.7% | -775.9% | -76.6% | |
|
|---|
| Gross Margin | 83.4% | 76.5% | 73.7% | 63.5% | 51.9% | -11.6% |
| EBITDA Margin | -5.0% | 10.2% | 6.4% | -77.6% | -22.7% | 55.0% |
| SG&A, % of revenue | 80.3% | 61.8% | 54.6% | 69.0% | 69.8% | 0.7% |
| Net Income Margin | -14.9% | 0.2% | -6.5% | -99.5% | -49.6% | 49.9% |
| CAPEX, % of revenue | 15.6% | 11.4% | 12.0% | 26.0% | 16.0% | -10.0% |
|
|---|
| ROIC | -25.2% | -2.8% | -8.6% | -67.6% | -45.0% | 22.6% |
| ROE | | 0.2% | -6.3% | -66.7% | -43.7% | 23.0% |
| Net Debt/EBITDA | | -4.6x | -8.4x | | |
The Rubicon Project, Inc. ($RUBI) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 25 | 29 | 30 | 41 | | -45.9% | -33.3% | -15.6% | 32.0% |
| EBITDA | -19 | -10 | -5 | 7 | | | | | |
| Net Income | -28 | -18 | -14 | -2 | | | | | |
Balance Sheet
|
|---|
| Cash | 68 | 72 | 82 | 80 | | -54.8% | -56.3% | -17.3% | 5.0% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 40.6% | 47.5% | 50.6% | 62.6% | | -27.5% | -20.6% | -12.5% | 11.9% |
| EBITDA Margin | -76.2% | -36.0% | -18.5% | 15.7% | | -64.6% | -30.2% | 258.6% | 64.6% |
| Net Income Margin | -111.8% | -62.8% | -46.4% | -5.4% | | -77.4% | -35.9% | 247.8% | 70.5% |
Peers in Systems Software
Below we provide The Rubicon Project, 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. ($FNJN) | | -6.2% | 292.3% | 174.6% | 63.0% |
| |
|---|
| Median (48 companies) | | 18.2% | 14.7% | 16.6% | 20.4% |
|---|
| The Rubicon Project, Inc. ($RUBI) | | 98.3% | 12.0% | -44.1% | -19.8% |
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. ($ATTU) | 90.7% | 84.9% | 83.9% | 84.1% | 87.5% |
| |
|---|
| Median (53 companies) | 76.1% | 74.5% | 73.1% | 74.1% | 75.0% |
|---|
| The Rubicon Project, Inc. ($RUBI) | 83.4% | 76.5% | 73.7% | 63.5% | 51.9% |
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. ($CA) | 33.9% | 36.7% | 37.2% | 36.1% | 35.3% |
| |
|---|
| Median (47 companies) | 1.0% | -6.6% | -9.8% | -3.6% | -3.9% |
|---|
| The Rubicon Project, Inc. ($RUBI) | -5.0% | 10.2% | 6.4% | -77.6% | -22.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| 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% |
| Marizyme Inc ($MRZM) | | 0.0% | 0.0% | 0.0% | 6.9% |
| |
|---|
| Median (48 companies) | 2.7% | 2.1% | 2.0% | 2.2% | 2.5% |
|---|
| The Rubicon Project, Inc. ($RUBI) | 15.6% | 11.4% | 12.0% | 26.0% | 16.0% |
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. ($RHT) | 15.1% | 14.1% | 14.2% | 16.4% | 22.4% |
| |
|---|
| Median (56 companies) | 0.0% | 0.0% | 0.0% | -2.7% | -0.9% |
|---|
| The Rubicon Project, Inc. ($RUBI) | -25.2% | -2.8% | -8.6% | -67.6% | -45.0% |
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 (23 companies) | -2.4x | -1.4x | -1.0x | -0.6x | -0.4x |
|---|
