Neonode Inc. revenue started to decline in 2018: decreased 7.8% vs. 11.2% growth a year earliner
03/07/2019 • About Neonode Inc. (
$NEON) • By InTwits
Neonode 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: -33.6%
- Neonode 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 -75.1%
- Neonode Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.6%. At the same time it's a lot of higher than industry average of 3.6%.
- CAPEX is quite volatile: $0m in 2018, $1m in 2017, $1m in 2016, $0m in 2015, $0m in 2014
- The company has unprofitable business model: ROIC is -35.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue dropped on 16.6%. Revenue decline showed acceleration in 18Q4 - it was 27.8% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 10.6 pp from -44.2% to -33.6% in 2018. EBITDA Margin followed a growing trend in 2014-2018.
Gross Margin surged on 12.1 pp from 77.1% to 89.2% in 2018. SG&A as a % of Revenue increased slightly on 1.6 pp from 71.2% to 72.8% in 2018. During 2014-2018 SG&A as a % of Revenue bottomed in 2016 at 68.1% and was growing since that time.
Net Income margin surged on 10.1 pp from -45.9% to -35.8% in 2018. Net Income margin followed a growing trend in 2014-2018.
Investments (CAPEX, working capital and M&A)
In 2018 the company had CAPEX/Revenue of 2.8%. The company's CAPEX/Revenue increased slightly on 0.98 pp from 1.8% in 2015 to 2.8% in 2018. For the last three years the average CAPEX/Revenue was 6.3%.
Return on investment
The company operates at negative ROIC (-35.9%) and ROE (-29.3%). ROIC surged on 35.1 pp from -71.0% to -35.9% in 2018. ROE jumped on 40.2 pp from -69.6% to -29.3% in 2018. ROIC followed a growing trend at 68.4 pp per annum in the last 5 years. ROE stuck to a growing trend at 77.0 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.4x and Debt / EBITDA is . Debt dropped on 24.3% while cash surged on 13.1%.
Neonode Inc. has no short term refinancing risk: cash is higher than short term debt (1,150.0%).
Management team
Hakan Persson is a Neonode Inc.'s CEO. Hakan Persson is a founder and has spent 1 year with the company.
Financial and operational results
FY ended 12/31/2018
Neonode Inc. ($NEON) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 4.740 | 11.115 | 10.213 | 10.241 | 8.538 | -16.6% |
| Gross Profit | 3.231 | 7.335 | 8.875 | 7.898 | 7.617 | -3.6% |
| SG&A | 10.049 | 8.752 | 6.950 | 7.296 | 6.216 | -14.8% |
| EBITDA | -13.989 | -7.509 | -4.784 | -4.523 | -2.869 | |
| Net Income | -14.234 | -7.820 | -5.291 | -4.705 | -3.060 | |
Balance Sheet
|
|---|
| Cash | 6.129 | 3.082 | 3.476 | 5.796 | 6.555 | 13.1% |
| Short Term Debt | 0.061 | 0.057 | 0.228 | 0.568 | 0.570 | 0.4% |
| Long Term Debt | 0.367 | 0.283 | 0.960 | 1.681 | 1.133 | -32.6% |
Cash flow
|
|---|
| Capex | 0.115 | 0.198 | 0.987 | 0.656 | 0.236 | -64.0% |
Ratios
|
|---|
| Revenue growth | 27.5% | 134.5% | -8.1% | 0.3% | -16.6% | |
| EBITDA growth | 9.1% | -46.3% | -36.3% | -5.5% | -36.6% | |
|
|---|
| Gross Margin | 68.2% | 66.0% | 86.9% | 77.1% | 89.2% | 12.1% |
| EBITDA Margin | -295.1% | -67.6% | -46.8% | -44.2% | -33.6% | 10.6% |
| SG&A, % of revenue | 212.0% | 78.7% | 68.1% | 71.2% | 72.8% | 1.6% |
| Net Income Margin | -300.3% | -70.4% | -51.8% | -45.9% | -35.8% | 10.1% |
| CAPEX, % of revenue | 2.4% | 1.8% | 9.7% | 6.4% | 2.8% | -3.6% |
|
|---|
| ROIC | -282.5% | -262.2% | -137.2% | -71.0% | -35.9% | 35.1% |
| ROE | -296.0% | -305.8% | -166.6% | -69.6% | -29.3% | 40.2% |
Neonode Inc. ($NEON) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 2 | 2 | 2 | 2 | | 1.8% | -19.5% | -16.6% | -27.8% |
| EBITDA | -1 | -1 | -1 | -1 | | | | | |
| Net Income | -1 | -1 | -1 | -1 | | | | | |
Balance Sheet
|
|---|
| Cash | 5 | 4 | 3 | 7 | | 187.6% | 162.3% | -60.9% | 13.1% |
| Short Term Debt | 1 | 1 | 1 | 1 | | 141.6% | -77.1% | -0.2% | 0.4% |
| Long Term Debt | 2 | 1 | 1 | 1 | | 65.4% | -32.9% | -30.7% | -32.6% |
Ratios
|
|---|
| Gross Margin | 98.1% | 95.3% | 82.4% | 81.1% | | 2.6% | 12.0% | -11.1% | 32.9% |
| EBITDA Margin | -25.3% | -48.1% | -35.6% | -28.8% | | 5.5% | -7.0% | 13.8% | 23.4% |
| Net Income Margin | -29.2% | -51.4% | -42.1% | -25.1% | | 8.3% | -8.5% | 6.3% | 27.4% |
Peers in Electronic Manufacturing Servi
Below you can find Neonode Inc. benchmarking vs. other companies in Electronic Manufacturing Servi 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 |
|---|
| RF Industries, Ltd. ($RFIL) | | 41.9% | -7.8% | -24.0% | 118.4% |
| Alpine 4 Technologies Ltd ($ALPP) | | | 35,893.8% | 5.8% | 71.5% |
| Kemet Corporation ($KEM) | | -1.3% | -10.7% | 3.1% | 58.4% |
| SMTC Corporation ($SMTX) | | -3.5% | -23.9% | -17.1% | 55.2% |
| Deswell Industries, Inc. ($DSWL) | | -7.0% | 17.1% | -0.1% | 36.3% |
| |
|---|
| Median (27 companies) | | 2.6% | 1.7% | 3.0% | 9.8% |
|---|
| Neonode Inc. ($NEON) | | 134.5% | -8.1% | 0.3% | -16.6% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Andrea Electronics Corp ($ANDR) | 83.8% | 99.1% | 88.5% | 96.2% | 70.4% |
| Data I/O Corporation ($DAIO) | 53.9% | 52.4% | 55.0% | 58.9% | 59.4% |
| IPG Photonics Corporation ($IPGP) | 54.1% | 54.6% | 54.9% | 56.6% | 54.8% |
| CTS Corporation ($CTS) | 32.2% | 33.2% | 35.4% | 33.2% | 35.1% |
| RF Industries, Ltd. ($RFIL) | 45.2% | 34.3% | 28.0% | 30.4% | 34.1% |
| |
|---|
| Median (27 companies) | 14.5% | 14.8% | 16.7% | 13.8% | 12.1% |
|---|
| Neonode Inc. ($NEON) | 68.2% | 66.0% | 86.9% | 77.1% | 89.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| IPG Photonics Corporation ($IPGP) | 41.5% | 42.4% | 41.8% | 44.7% | 40.9% |
| TE Connectivity Ltd. ($TEL) | 19.7% | 19.3% | 20.9% | 20.4% | 21.4% |
| CTS Corporation ($CTS) | 14.7% | 9.0% | 20.7% | 14.0% | 17.8% |
| Methode Electronics, Inc. ($MEI) | 12.6% | 15.4% | 16.5% | 16.5% | 16.1% |
| RF Industries, Ltd. ($RFIL) | 12.4% | 6.7% | -12.1% | 3.1% | 15.9% |
| |
|---|
| Median (27 companies) | 4.8% | 5.8% | 5.4% | 5.0% | 4.8% |
|---|
| Neonode Inc. ($NEON) | -295.1% | -67.6% | -46.8% | -44.2% | -33.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Maxwell Technologies, Inc. ($MXWL) | 3.7% | 2.5% | 4.9% | 6.6% | 11.3% |
| IPG Photonics Corporation ($IPGP) | 11.5% | 7.8% | 12.6% | 9.0% | 11.0% |
| eMagin Corporation ($EMAN) | 5.8% | 4.7% | 6.7% | 6.2% | 8.8% |
| TE Connectivity Ltd. ($TEL) | 5.3% | 4.9% | 5.3% | 5.6% | 6.7% |
| CTS Corporation ($CTS) | 3.2% | 2.5% | 5.2% | 4.3% | 6.1% |
| |
|---|
| Median (27 companies) | 2.7% | 2.4% | 2.8% | 2.7% | 2.4% |
|---|
| Neonode Inc. ($NEON) | 2.4% | 1.8% | 9.7% | 6.4% | 2.8% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| RF Industries, Ltd. ($RFIL) | 8.5% | 4.6% | -18.7% | 0.9% | 29.2% |
| IPG Photonics Corporation ($IPGP) | 27.0% | 27.8% | 25.1% | 29.9% | 22.9% |
| Methode Electronics, Inc. ($MEI) | 19.7% | 26.1% | 22.7% | 20.8% | 19.2% |
| TE Connectivity Ltd. ($TEL) | 17.3% | 15.1% | 15.9% | 16.2% | 18.4% |
| Kemet Corporation ($KEM) | -2.8% | 3.8% | 6.2% | 6.9% | 16.9% |
| |
|---|
| Median (29 companies) | 5.0% | 5.3% | 6.7% | 5.7% | 6.7% |
|---|
| Neonode Inc. ($NEON) | -282.5% | -262.2% | -137.2% | -71.0% | -35.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Alpine 4 Technologies Ltd ($ALPP) | | | | 34.1x | 65.7x |
| SigmaTron International, Inc. ($SGMA) | 2.7x | 4.1x | 2.4x | 3.4x | 16.0x |
| SMTC Corporation ($SMTX) | 3.5x | 1.8x | 1.0x | | 11.3x |
| IEC Electronics Corp. ($IEC) | 7.1x | 14.0x | 2.0x | 5.6x | 4.9x |
| Key Tronic Corporation ($KTCC) | 0.2x | 3.4x | 2.6x | 2.5x | 3.9x |
| |
|---|
| Median (23 companies) | -0.2x | -0.6x | 0.2x | 0.2x | 0.2x |
|---|
