Synacor, Inc. revenue increased on 2.8% and EBITDA Margin increased on 2.7 pp from -0.29% to 2.4%
03/13/2019 • About Synacor, Inc. (
$SYNC) • By InTwits
Synacor, Inc. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 2.4% in 2018, -0.3% in 2017, 0.1% in 2016, 3.6% in 2015, -1.6% in 2014
- Synacor, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.4%. At the same time it's in pair with industry average of 3.1%
- CAPEX is quite volatile: $1m in 2018, $2m in 2017, $2m in 2016, $0m in 2015, $0m in 2014
- The company has unprofitable business model: ROIC is -11.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 2.8%. Revenue growth showed slowdown in 18Q4 - it was -14.4% YoY. During 2014-2018 Revenue growth topped in 2016 at 15.5% and was decelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 10.9 pp from -15.1% to -4.2% in FY2018.
Gross Margin showed almost no change in 2018. During 2014-2018 Gross Margin topped in 2016 at 53.6% and was declining since that time. SG&A as a % of Revenue showed almost no change in 2018. During 2014-2018 SG&A as a % of Revenue topped in 2016 at 33.4% and was declining since that time.
Net Income margin increased slightly on 1.7 pp from -7.0% to -5.3% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 the company had CAPEX/Revenue of 4.3%. The company's CAPEX/Revenue increased slightly on 1.4 pp from 2.9% in 2015 to 4.3% in 2018. Average CAPEX/Revenue for the last three years was 4.9%. The company maintained rich investment policy and has spent a lot to CAPEX (182% of EBITDA).
Return on investment
The company operates at negative ROIC (-11.1%) and ROE (-14.3%). ROIC increased on 8.0 pp from -19.1% to -11.1% in 2018. ROE increased on 6.5 pp from -20.8% to -14.3% in 2018.
Leverage (Debt)
Debt level is -3.6x Net Debt / EBITDA and 1.1x Debt / EBITDA. Debt dropped on 36.5% while cash dropped on 29.2%.
Synacor, Inc. has no short term refinancing risk: cash is higher than short term debt (683.9%).
Management team
Synacor, Inc.'s CEO Himesh Bhise is a founder and has spent 5 years with the company. The company's CFO is Timothy J Heasley "Tim". Timothy J Heasley "Tim" has 1 year tenure at the company.
Financial and operational results
FY ended 12/31/2018
Synacor, Inc. ($SYNC) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 106.6 | 110.2 | 127.4 | 140.0 | 143.9 | 2.8% |
| Gross Profit | 48.6 | 55.8 | 68.2 | 70.0 | 71.3 | 1.9% |
| SG&A | 25.1 | 31.8 | 42.5 | 42.7 | 43.6 | 1.9% |
| EBITDA | -1.7 | 4.0 | 0.1 | -0.4 | 3.4 | |
| Net Income | -12.9 | -3.5 | -10.7 | -9.8 | -7.6 | |
Balance Sheet
|
|---|
| Cash | 25.6 | 15.7 | 14.3 | 22.5 | 15.9 | -29.2% |
| Short Term Debt | 1.2 | 1.6 | 1.0 | 2.4 | 2.3 | -4.7% |
| Long Term Debt | 1.4 | 6.0 | 6.0 | 3.4 | 1.4 | -59.4% |
Cash flow
|
|---|
| Capex | 5.0 | 3.2 | 5.9 | 7.9 | 6.3 | -20.6% |
Ratios
|
|---|
| Revenue growth | -4.7% | 3.4% | 15.5% | 9.9% | 2.8% | |
| EBITDA growth | -142.5% | -338.8% | -98.2% | -652.7% | -941.8% | |
|
|---|
| Gross Margin | 45.6% | 50.6% | 53.6% | 50.0% | 49.6% | -0.4% |
| EBITDA Margin | -1.6% | 3.6% | 0.1% | -0.3% | 2.4% | 2.7% |
| SG&A, % of revenue | 23.5% | 28.9% | 33.4% | 30.5% | 30.3% | -0.2% |
| Net Income Margin | -12.1% | -3.2% | -8.4% | -7.0% | -5.3% | 1.7% |
| CAPEX, % of revenue | 4.7% | 2.9% | 4.7% | 5.6% | 4.3% | -1.3% |
|
|---|
| ROIC | -13.5% | -5.8% | -18.1% | -19.1% | -11.1% | 8.0% |
| ROE | -27.3% | -7.8% | -25.0% | -20.8% | -14.3% | 6.5% |
| Net Debt/EBITDA | | -2.0x | -98.9x | | -3.6x |
Synacor, Inc. ($SYNC) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 33 | 36 | 36 | 39 | | 24.0% | 15.1% | -1.7% | -14.4% |
| EBITDA | 0 | 0 | 0 | 3 | | | | -59.7% | -16.2% |
| Net Income | -2 | -3 | -2 | -0 | | | | -950.6% | |
Balance Sheet
|
|---|
| Cash | 16 | 15 | 16 | 16 | | 45.9% | -34.9% | -31.6% | -29.2% |
| Short Term Debt | 2 | 2 | 2 | 2 | | 107.7% | 24.9% | -4.2% | -4.7% |
| Long Term Debt | 3 | 2 | 2 | 1 | | -54.1% | -24.5% | -58.1% | -59.4% |
Ratios
|
|---|
| Gross Margin | 53.8% | 49.2% | 49.0% | 47.0% | | 1.1% | -4.5% | -2.4% | 2.2% |
| EBITDA Margin | 0.2% | 1.0% | 1.4% | 6.4% | | 15.0% | 3.3% | -2.0% | -0.1% |
| Net Income Margin | -7.2% | -7.2% | -6.2% | -1.0% | | 17.9% | 3.3% | -6.9% | -0.7% |
Peers in Application Software
Below we provide Synacor, Inc. 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 ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 14.0% | 13.6% | 15.7% | 15.2% |
|---|
| Synacor, Inc. ($SYNC) | | 3.4% | 15.5% | 9.9% | 2.8% |
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. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 63.4% | 61.9% | 64.2% | 64.6% | 66.1% |
|---|
| Synacor, Inc. ($SYNC) | 45.6% | 50.6% | 53.6% | 50.0% | 49.6% |
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. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.3% | -10.7% | -5.3% | -4.2% | -3.3% |
|---|
| Synacor, Inc. ($SYNC) | -1.6% | 3.6% | 0.1% | -0.3% | 2.4% |
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. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 2.9% | 2.3% | 2.4% |
|---|
| Synacor, Inc. ($SYNC) | 4.7% | 2.9% | 4.7% | 5.6% | 4.3% |
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. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.4% | -13.1% | -9.2% | -10.2% | -9.3% |
|---|
| Synacor, Inc. ($SYNC) | -13.5% | -5.8% | -18.1% | -19.1% | -11.1% |
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. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (69 companies) | -1.4x | -0.9x | -0.9x | -0.8x | -0.6x |
|---|
| Synacor, Inc. ($SYNC) | | -2.0x | -98.9x | | -3.6x |
