Zix Corporation Net Income surged on 292% and EBITDA Margin showed almost no change
02/28/2019 • About Zix Corporation (
$ZIXI) • By InTwits
Zix Corporation reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Zix Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.9%. At the same time it's in pair with industry average of 7.6%
- CAPEX is quite volatile: $15m in 2018, $47m in 2017, $52m in 2016, $17m in 2015, $11m in 2014
- The company has highly profitable business model: ROIC is 19.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Zix Corporation's Revenue increased on 7.3%. Revenue growth showed acceleration in 18Q4 - it increased 9.8% YoY. During 2014-2018 Revenue growth topped in 2016 at 9.9% and was decelerating since that time. EBITDA Margin showed almost no change in 2018. During the last 5 years EBITDA Margin topped in 2017 at 19.7%.
Gross Margin decreased on 2.4 pp from 80.8% to 78.5% in 2018. Gross Margin followed a declining trend at -1.2 pp per annum in 2014-2018. SG&A as a % of Revenue showed almost no change in 2018. SG&A as a % of Revenue followed a declining trend at -1.2 pp per annum in the last 5 years.
Net Income margin surged on 34.2 pp from -12.3% to 21.9% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 the company had CAPEX/Revenue of 5.9%. CAPEX/Revenue increased on 2.4 pp from 3.6% in 2015 to 5.9% in 2018. It's average CAPEX/Revenue for the last three years was 4.7%. During the last 5 years CAPEX as a % of Revenue bottomed in 2016 at 3.6% and was growing since that time.
Return on investment
The company operates at high and attractive ROE (29.6%) while ROIC is a bit lower (19.0%). ROIC decreased on 3.0 pp from 22.0% to 19.0% in 2018. ROE jumped on 47.0 pp from -17.4% to 29.6% in 2018. ROIC grew at 2.4 pp per annum in 2014-2018.
Leverage (Debt)
The company has no debt. Cash dropped on 17.9%.
Valuation and dividends
Zix Corporation's trades at EV/EBITDA 26.2x and P/E 25.0x.
Management team
Zix Corporation's CEO David J Wagner "Dave" is a founder and has spent 3 years with the company. The company's CFO David E Rockvam "Dave" has spent 3 years with the company.
Financial and operational results
FY ended 12/31/2018
Zix Corporation ($ZIXI) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 50.347 | 54.713 | 60.144 | 65.663 | 70.478 | 7.3% |
| Gross Profit | 42.023 | 45.120 | 49.611 | 53.061 | 55.292 | 4.2% |
| SG&A | 26.222 | 28.887 | 30.742 | 31.871 | 33.999 | 6.7% |
| EBITDA | 8.373 | 10.068 | 11.619 | 12.951 | 13.676 | 5.6% |
| Net Income | 4.103 | 5.016 | 5.837 | -8.057 | 15.444 | |
Balance Sheet
|
|---|
| Cash | 21.685 | 28.664 | 26.457 | 33.009 | 27.109 | -17.9% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 3.402 | 1.951 | 2.136 | 3.041 | 4.179 | 37.4% |
Ratios
|
|---|
| Revenue growth | 4.6% | 8.7% | 9.9% | 9.2% | 7.3% | |
| EBITDA growth | -22.3% | 20.2% | 15.4% | 11.5% | 5.6% | |
|
|---|
| Gross Margin | 83.5% | 82.5% | 82.5% | 80.8% | 78.5% | -2.4% |
| EBITDA Margin | 16.6% | 18.4% | 19.3% | 19.7% | 19.4% | -0.3% |
| SG&A, % of revenue | 52.1% | 52.8% | 51.1% | 48.5% | 48.2% | -0.3% |
| Net Income Margin | 8.1% | 9.2% | 9.7% | -12.3% | 21.9% | 34.2% |
| CAPEX, % of revenue | 6.8% | 3.6% | 3.6% | 4.6% | 5.9% | 1.3% |
|
|---|
| ROIC | 11.0% | 14.0% | 17.6% | 22.0% | 19.0% | -3.0% |
| ROE | 6.7% | 8.9% | 11.0% | -17.4% | 29.6% | 47.0% |
| Net Debt/EBITDA | -2.6x | -2.8x | -2.3x | -2.5x | -2.0x | 0.6x |
Zix Corporation ($ZIXI) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 17 | 18 | 18 | 18 | | 4.8% | 6.9% | 7.7% | 9.8% |
| EBITDA | 3 | 3 | 4 | 3 | | 3.6% | -8.1% | 15.3% | 11.3% |
| Net Income | 2 | 2 | 2 | 9 | | 6.6% | 61.5% | 28.8% | |
Balance Sheet
|
|---|
| Cash | 29 | 18 | 24 | 27 | | 24.9% | -40.0% | -26.8% | -17.9% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 78.9% | 78.3% | 78.4% | 78.3% | | -3.3% | -1.9% | -1.9% | -2.3% |
| EBITDA Margin | 20.1% | 17.7% | 23.3% | 16.5% | | -0.2% | -2.9% | 1.5% | 0.2% |
| Net Income Margin | 11.4% | 10.5% | 13.7% | 50.1% | | 0.2% | 3.6% | 2.2% | 126.7% |
Peers in Application Software
Below we provide Zix Corporation benchmarking against other companies in Application 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 |
|---|
| 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 ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 14.0% | 14.3% | 15.7% | 15.2% |
|---|
| Zix Corporation ($ZIXI) | | 8.7% | 9.9% | 9.2% | 7.3% |
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. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 62.8% | 61.7% | 63.8% | 64.4% | 65.7% |
|---|
| Zix Corporation ($ZIXI) | 83.5% | 82.5% | 82.5% | 80.8% | 78.5% |
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. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.3% | -10.7% | -5.3% | -4.2% | -3.3% |
|---|
| Zix Corporation ($ZIXI) | 16.6% | 18.4% | 19.3% | 19.7% | 19.4% |
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. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 2.9% | 2.3% | 2.4% |
|---|
| Zix Corporation ($ZIXI) | 6.8% | 3.6% | 3.6% | 4.6% | 5.9% |
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. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.4% | -13.1% | -9.8% | -11.8% | -10.4% |
|---|
| Zix Corporation ($ZIXI) | 11.0% | 14.0% | 17.6% | 22.0% | 19.0% |
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. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (69 companies) | -1.2x | -0.9x | -0.9x | -0.8x | -0.6x |
|---|
| Zix Corporation ($ZIXI) | -2.6x | -2.8x | -2.3x | -2.5x | -2.0x |
