Issuer Direct Corporation reports 55.3% Net Income decline in 2018 and 3.9 pp EBITDA Margin decline from 21.9% to 18.0%
02/28/2019 • About Issuer Direct Corporation (
$ISDR) • By InTwits
Issuer Direct Corporation reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Issuer Direct Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.6%.
- The company has potentially unprofitable business model: ROIC is 5.5%
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 surged on 12.7%. Revenue growth showed slowdown in 18Q4 - it was 7.3% YoY. During the last 5 years Revenue growth bottomed in 2015 at -14.7% and was accelerating since that time. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 3.9 pp from 21.9% to 18.0% in 2018.
Gross Margin decreased slightly on 1.9 pp from 73.1% to 71.2% in 2018. During the last 5 years Gross Margin topped in 2016 at 74.9% and was declining since that time. SG&A as a % of Revenue increased on 2.4 pp from 47.4% to 49.8% in 2018. During the last 5 years SG&A as a % of Revenue bottomed in 2017 at 47.4%.
Net Income margin decreased on 8.9 pp from 14.8% to 5.9% in 2018. During the last 5 years Net Income margin topped in 2017 at 14.8%.
Investments (CAPEX, working capital and M&A)
Issuer Direct Corporation's CAPEX/Revenue was 0.36% in 2018. The company's CAPEX/Revenue decreased slightly on 0.58 pp from 0.94% in 2015 to 0.36% in 2018. Average CAPEX/Revenue for the last three years was 0.46%.
Return on investment
The company operates at low ROIC (5.5%) and ROE (4.3%). ROIC dropped on 10.0 pp from 15.5% to 5.5% in 2018. ROE dropped on 11.4 pp from 15.7% to 4.3% in 2018. During 2014-2018 ROE topped in 2016 at 16.3% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is -6.5x and Debt / EBITDA is 0.2x. Debt dropped on 30.5% while cash surged on 250%.
Issuer Direct Corporation has no short term refinancing risk: cash is higher than short term debt (5,381.9%).
Valuation and dividends
The company's trades at EV/EBITDA 9.7x and P/E 49.5x.
Financial and operational results
FY ended 12/31/2018
Issuer Direct Corporation ($ISDR) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 13.630 | 11.620 | 12.059 | 12.628 | 14.232 | 12.7% |
| Gross Profit | 9.564 | 8.172 | 9.035 | 9.233 | 10.129 | 9.7% |
| SG&A | 6.933 | 5.585 | 5.786 | 5.988 | 7.087 | 18.4% |
| EBITDA | 2.631 | 1.734 | 3.012 | 2.763 | 2.560 | -7.3% |
| Net Income | 0.042 | 0.145 | 1.555 | 1.871 | 0.837 | -55.3% |
Balance Sheet
|
|---|
| Cash | 1.721 | 4.215 | 5.339 | 4.917 | 17.222 | 250.3% |
| Short Term Debt | 1.131 | 0.000 | 0.000 | 0.288 | 0.320 | 11.1% |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.570 | 0.276 | -51.6% |
Cash flow
|
|---|
| Capex | 0.071 | 0.110 | 0.112 | 0.011 | 0.051 | 363.6% |
Ratios
|
|---|
| Revenue growth | 54.1% | -14.7% | 3.8% | 4.7% | 12.7% | |
| EBITDA growth | 19.9% | -34.1% | 73.7% | -8.3% | -7.3% | |
|
|---|
| Gross Margin | 70.2% | 70.3% | 74.9% | 73.1% | 71.2% | -1.9% |
| EBITDA Margin | 19.3% | 14.9% | 25.0% | 21.9% | 18.0% | -3.9% |
| SG&A, % of revenue | 50.9% | 48.1% | 48.0% | 47.4% | 49.8% | 2.4% |
| Net Income Margin | 0.3% | 1.2% | 12.9% | 14.8% | 5.9% | -8.9% |
| CAPEX, % of revenue | 0.5% | 0.9% | 0.9% | 0.1% | 0.4% | 0.3% |
|
|---|
| ROIC | 22.5% | 8.4% | 19.2% | 15.5% | 5.5% | -10.0% |
| ROE | 0.8% | 2.0% | 16.3% | 15.7% | 4.3% | -11.4% |
| Net Debt/EBITDA | -0.2x | -2.4x | -1.8x | -1.5x | -6.5x | -5.0x |
Issuer Direct Corporation ($ISDR) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 4 | 4 | 3 | 4 | | 23.6% | 10.3% | 11.1% | 7.3% |
| EBITDA | 1 | 1 | 0 | 0 | | 21.4% | 1.8% | -28.7% | -22.7% |
| Net Income | 0 | 0 | 0 | 0 | | -1.5% | -25.8% | -72.1% | -91.3% |
Balance Sheet
|
|---|
| Cash | 5 | 7 | 19 | 17 | | -1.9% | 11.6% | 203.5% | 250.3% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | 11.1% |
| Long Term Debt | 1 | 1 | 1 | 0 | | | | | -51.6% |
Ratios
|
|---|
| Gross Margin | 71.1% | 72.9% | 69.9% | 70.6% | | -2.8% | -0.7% | -2.1% | -2.3% |
| EBITDA Margin | 18.6% | 24.6% | 14.5% | 13.6% | | -0.3% | -2.1% | -8.1% | -5.3% |
| Net Income Margin | 9.1% | 9.6% | 2.6% | 1.8% | | -2.3% | -4.7% | -7.9% | -20.1% |
Peers in Application Software
Below you can find Issuer Direct Corporation 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 ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 14.0% | 14.3% | 15.7% | 15.2% |
|---|
| Issuer Direct Corporation ($ISDR) | | -14.7% | 3.8% | 4.7% | 12.7% |
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. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 62.8% | 61.7% | 63.8% | 64.4% | 65.7% |
|---|
| Issuer Direct Corporation ($ISDR) | 70.2% | 70.3% | 74.9% | 73.1% | 71.2% |
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. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.3% | -10.7% | -5.3% | -4.2% | -3.3% |
|---|
| Issuer Direct Corporation ($ISDR) | 19.3% | 14.9% | 25.0% | 21.9% | 18.0% |
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% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 3.0% | 2.3% | 2.4% |
|---|
| Issuer Direct Corporation ($ISDR) | 0.5% | 0.9% | 0.9% | 0.1% | 0.4% |
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. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.4% | -13.1% | -9.8% | -11.8% | -10.4% |
|---|
| Issuer Direct Corporation ($ISDR) | 22.5% | 8.4% | 19.2% | 15.5% | 5.5% |
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. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (69 companies) | -1.4x | -0.9x | -0.9x | -0.8x | -0.6x |
|---|
| Issuer Direct Corporation ($ISDR) | -0.2x | -2.4x | -1.8x | -1.5x | -6.5x |
