21Vianet Group, Inc. reports 46.3 pp EBITDA Margin growth from -20.7% to 25.6% in 2018 in 2018 and almost no change in Revenue of 3,401
03/04/2019 • About 21Vianet Group, Inc. (
$VNET) • By InTwits
21Vianet Group, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 25.6% in 2018, -20.7% in 2017, -4.8% in 2016, 8.3% in 2015, 10.9% in 2014
- 21Vianet Group, Inc. has high CAPEX intensity: 5 year average CAPEX/Revenue was 20.4%. At the same time it's a lot of higher than industry average of 5.2%.
- CAPEX is quite volatile: $435m in 2018, $396m in 2017, $575m in 2016, $1,052m in 2015, $938m in 2014
- The company has potentially unprofitable business model: ROIC is 2.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
21Vianet Group, Inc.'s Revenue showed almost no change in 2018. Revenue growth showed acceleration in 18Q4 - it increased 17.8% YoY. Revenue decline was accelerating on average at -12.5 pp per annum in the last 5 years. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin surged on 46.3 pp from -20.7% to 25.6% in 2018. During the last 5 years EBITDA Margin bottomed in 2017 at -20.7%.
Gross Margin increased on 5.4 pp from 22.4% to 27.8% in 2018. During the last 5 years Gross Margin bottomed in 2016 at 19.6% and was growing since that time. SG&A as a % of Revenue decreased on 4.2 pp from 22.9% to 18.7% in 2018. SG&A as a % of Revenue declined at -2.0 pp per annum in 2014-2018.
Net Income margin surged on 16.7 pp from -22.8% to -6.0% in 2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 12.8% in 2018. The company's CAPEX/Revenue dropped on 16.2 pp from 29.0% in 2015 to 12.8% in 2018. It's average level of CAPEX/Revenue for the last three years was 13.4%. CAPEX as a % of Revenue followed a declining trend at -5.7 pp per annum in 2014-2018.
Return on investment
The company operates at low but positive ROIC (2.8%) and negative ROE (-4.0%). ROIC surged on 17.4 pp from -14.6% to 2.8% in 2018. ROE surged on 12.3 pp from -16.4% to -4.0% in 2018. During the last 5 years ROIC bottomed in 2017 at -14.6%.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.0x and Debt / EBITDA is 3.7x. Net Debt / EBITDA jumped1.0x from to 1.0x in 2018. Debt increased on 7.3% while cash surged on 21.0%.
21Vianet Group, Inc. has no short term refinancing risk: cash is higher than short term debt (683.7%).
Financial and operational results
FY ended 12/31/2018
21Vianet Group, Inc. ($VNET) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 2,876 | 3,634 | 3,642 | 3,393 | 3,401 | 0.2% |
| Gross Profit | 810 | 854 | 712 | 758 | 945 | 24.6% |
| SG&A | 781 | 960 | 993 | 777 | 635 | -18.3% |
| EBITDA | 315 | 302 | -176 | -701 | 872 | |
| Net Income | -348 | -428 | -634 | -773 | -205 | |
Balance Sheet
|
|---|
| Cash | 644 | 1,685 | 1,297 | 1,950 | 2,359 | 21.0% |
| Short Term Debt | 1,188 | 719 | 2,386 | 322 | 345 | 7.3% |
| Long Term Debt | 2,837 | 2,667 | 805 | 2,718 | 2,916 | 7.3% |
Cash flow
|
|---|
| Capex | 938 | 1,052 | 575 | 396 | 435 | 9.9% |
Ratios
|
|---|
| Revenue growth | 46.3% | 26.3% | 0.2% | -6.8% | 0.2% | |
| EBITDA growth | 5.6% | -4.0% | -158.3% | 298.3% | -224.3% | |
|
|---|
| Gross Margin | 28.2% | 23.5% | 19.6% | 22.4% | 27.8% | 5.4% |
| EBITDA Margin | 10.9% | 8.3% | -4.8% | -20.7% | 25.6% | 46.3% |
| SG&A, % of revenue | 27.1% | 26.4% | 27.3% | 22.9% | 18.7% | -4.2% |
| Net Income Margin | -12.1% | -11.8% | -17.4% | -22.8% | -6.0% | 16.7% |
| CAPEX, % of revenue | 32.6% | 29.0% | 15.8% | 11.7% | 12.8% | 1.1% |
|
|---|
| ROIC | -1.5% | -3.6% | -8.9% | -14.6% | 2.8% | 17.4% |
| ROE | -15.3% | -13.5% | -16.6% | -16.4% | -4.0% | 12.3% |
| Net Debt/EBITDA | 10.7x | 5.6x | | | 1.0x |
21Vianet Group, Inc. ($VNET) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 801 | 828 | 870 | 902 | | -7.1% | -5.7% | -1.8% | 17.8% |
| EBITDA | 192 | 205 | 231 | 245 | | 94.0% | 108.9% | | 61.2% |
| Net Income | 33 | -94 | -30 | -114 | | | | | -114.3% |
Balance Sheet
|
|---|
| Cash | 1,850 | 2,150 | 2,334 | 2,359 | | 137.4% | 183.7% | 57.2% | 21.0% |
| Short Term Debt | 346 | 360 | 394 | 345 | | -85.4% | -82.0% | -78.8% | 7.3% |
| Long Term Debt | 2,647 | 2,790 | 2,996 | 2,916 | | 225.2% | 248.2% | 8.2% | 7.3% |
Ratios
|
|---|
| Gross Margin | 28.5% | 27.7% | 27.7% | 27.3% | | 7.5% | 6.3% | 6.3% | 1.2% |
| EBITDA Margin | 23.9% | 24.7% | 26.5% | 27.1% | | 12.5% | 13.6% | 145.0% | 7.3% |
| Net Income Margin | 4.1% | -11.4% | -3.4% | -12.6% | | 15.7% | -0.4% | 151.8% | -116.9% |
Peers in Internet Services & Infrastruc
Below we provide 21Vianet Group, Inc. benchmarking against other companies in Internet Services & Infrastruc 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 |
|---|
| Liberated Syndication Inc ($LSYN) | | | | 20.4% | 108.0% |
| GTT Communications, Inc. ($GTT) | | 78.1% | 41.3% | 58.7% | 80.1% |
| MongoDB, Inc. ($MDB) | | | | 55.3% | 63.8% |
| Twilio Inc. ($TWLO) | | 87.9% | 66.1% | 43.9% | 62.9% |
| Okta, Inc. ($OKTA) | | | 109.5% | 86.6% | 60.0% |
| |
|---|
| Median (15 companies) | 25.5% | 11.7% | 15.8% | 13.7% | 19.2% |
|---|
| 21Vianet Group, Inc. ($VNET) | | 26.3% | 0.2% | -6.8% | 0.2% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Liberated Syndication Inc ($LSYN) | | | 68.1% | 77.5% | 84.9% |
| VeriSign, Inc. ($VRSN) | 81.3% | 81.8% | 82.6% | 83.4% | 84.2% |
| Wix.com Ltd. ($WIX) | 81.6% | 82.8% | 84.4% | 83.7% | 79.0% |
| MongoDB, Inc. ($MDB) | | | 68.0% | 70.5% | 74.2% |
| Carbonite, Inc. ($CARB) | 68.5% | 71.6% | 70.6% | 70.7% | 71.2% |
| |
|---|
| Median (15 companies) | 53.1% | 55.4% | 61.5% | 65.0% | 66.4% |
|---|
| 21Vianet Group, Inc. ($VNET) | 28.2% | 23.5% | 19.6% | 22.4% | 27.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| VeriSign, Inc. ($VRSN) | 62.2% | 63.0% | 65.2% | 65.0% | 67.1% |
| Liberated Syndication Inc ($LSYN) | | | 32.0% | -29.9% | 32.2% |
| Internap Corporation ($INAP) | 20.0% | 21.0% | -5.4% | 28.4% | 30.5% |
| Akamai Technologies, Inc. ($AKAM) | 37.5% | 34.8% | 33.9% | 27.6% | 29.4% |
| Endurance International Group Holdings, Inc. ($EIGI) | 23.2% | 24.0% | 14.8% | 20.0% | 26.0% |
| |
|---|
| Median (15 companies) | 4.5% | 1.3% | -3.1% | -1.1% | 14.4% |
|---|
| 21Vianet Group, Inc. ($VNET) | 10.9% | 8.3% | -4.8% | -20.7% | 25.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Akamai Technologies, Inc. ($AKAM) | 16.2% | 20.2% | 13.5% | 16.7% | 14.9% |
| Internap Corporation ($INAP) | 24.0% | 17.5% | 14.9% | 12.7% | 12.1% |
| Limelight Networks, Inc. ($LLNW) | 11.5% | 14.5% | 5.7% | 11.2% | 8.2% |
| GTT Communications, Inc. ($GTT) | 2.8% | 3.8% | 4.6% | 5.1% | 5.2% |
| Carbonite, Inc. ($CARB) | 11.8% | 7.1% | 3.2% | 7.2% | 4.4% |
| |
|---|
| Median (15 companies) | 3.9% | 3.8% | 3.3% | 3.8% | 3.0% |
|---|
| 21Vianet Group, Inc. ($VNET) | 32.6% | 29.0% | 15.8% | 11.7% | 12.8% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| VeriSign, Inc. ($VRSN) | 60.6% | 68.7% | 65.2% | 54.3% | 81.9% |
| Liberated Syndication Inc ($LSYN) | | | | -13.2% | 12.1% |
| Akamai Technologies, Inc. ($AKAM) | 15.5% | 12.5% | 11.9% | 7.9% | 8.2% |
| Endurance International Group Holdings, Inc. ($EIGI) | 1.0% | 4.2% | -2.3% | 2.0% | 7.5% |
| GoDaddy Inc. ($GDDY) | -3.3% | -1.7% | 2.9% | 2.7% | 4.6% |
| |
|---|
| Median (16 companies) | -3.0% | -6.9% | -18.5% | -13.2% | 1.0% |
|---|
| 21Vianet Group, Inc. ($VNET) | -1.5% | -3.6% | -8.9% | -14.6% | 2.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| GTT Communications, Inc. ($GTT) | 3.1x | 7.4x | 6.8x | 7.2x | 12.7x |
| Internap Corporation ($INAP) | 5.1x | 5.3x | | 6.5x | 6.9x |
| Endurance International Group Holdings, Inc. ($EIGI) | 7.3x | 6.0x | 11.8x | 7.8x | 5.8x |
| GoDaddy Inc. ($GDDY) | 14.0x | 5.4x | 2.3x | 6.8x | 3.9x |
| VeriSign, Inc. ($VRSN) | 1.9x | 2.5x | 2.2x | 2.6x | 1.8x |
| |
|---|
| Median (9 companies) | 2.5x | 2.5x | 2.2x | 4.5x | 1.8x |
|---|
| 21Vianet Group, Inc. ($VNET) | 10.7x | 5.6x | | | 1.0x |
