Internap Corporation Debt jumped on 29.8% and EBITDA jumped on 21.4%
03/14/2019 • About Internap Corporation (
$INAP) • By InTwits
Internap Corporation reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 30.5% in 2018, 28.4% in 2017, -5.4% in 2016, 21.0% in 2015, 20.0% in 2014
- Internap Corporation has high CAPEX intensity: 5 year average CAPEX/Revenue was 16.2%. At the same time it's a lot of higher than industry average of 5.2%.
- CAPEX is quite volatile: $38m in 2018, $36m in 2017, $44m in 2016, $56m in 2015, $80m in 2014
- The company has potentially unprofitable business model: ROIC is 1.0%
- It operates with high leverage: Net Debt/EBITDA is 6.9x while industry average is 2.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 13.1%. Revenue growth showed slowdown in 18Q4 - it was 11.7% YoY. During 2014-2018 Revenue growth bottomed in 2016 at -6.3% and was accelerating since that time. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 2.1 pp from 28.4% to 30.5% in 2018.
Gross Margin increased on 3.0 pp from 53.0% to 56.0% in 2018. Gross Margin followed a growing trend at 3.1 pp per annum in the last 5 years. SG&A as a % of Revenue increased slightly on 1.4 pp from 22.3% to 23.7% in 2018.
Net Income margin decreased on 3.5 pp from -16.2% to -19.7% in 2018.
Investments (CAPEX, working capital and M&A)
Internap Corporation's CAPEX/Revenue was 12.1% in 2018. The company showed decline in CAPEX/Revenue of 5.4 pp from 17.5% in 2015 to 12.1% in 2018. For the last three years the average CAPEX/Revenue was 13.2%. CAPEX as a % of Revenue declined at -2.9 pp per annum in 2014-2018.
Leverage (Debt)
Debt level is 6.9x Net Debt / EBITDA and 7.1x Debt / EBITDA. Net Debt / EBITDA jumped on 0.5x from 6.5x to 6.9x in 2018. Debt surged on 29.8% while cash jumped on 22.1%.
Internap Corporation has no short term refinancing risk: cash is higher than short term debt (189.6%).
Management team
The company's CEO Peter D Aquino "Pete" is a founder and has spent 2 years with the company. Internap Corporation's CFO is James C Keeley Jr. James C Keeley Jr has 0 years tenure at the company.
Financial and operational results
FY ended 12/31/2018
Internap Corporation ($INAP) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 335.0 | 318.3 | 298.3 | 280.7 | 317.4 | 13.1% |
| Gross Profit | 147.3 | 146.9 | 141.9 | 148.7 | 177.6 | 19.4% |
| SG&A | 78.9 | 78.5 | 70.6 | 62.7 | 75.4 | 20.1% |
| EBITDA | 66.8 | 66.8 | -16.1 | 79.8 | 96.8 | 21.4% |
| Net Income | -39.5 | -48.4 | -124.7 | -45.3 | -62.5 | |
Balance Sheet
|
|---|
| Cash | 20.1 | 17.8 | 10.4 | 14.6 | 17.8 | 22.1% |
| Short Term Debt | 8.9 | 9.6 | 10.8 | 17.6 | 9.4 | -46.5% |
| Long Term Debt | 350.1 | 365.0 | 362.8 | 511.6 | 677.7 | 32.5% |
Cash flow
|
|---|
| Capex | 80.5 | 55.7 | 44.4 | 35.7 | 38.3 | 7.2% |
Ratios
|
|---|
| Revenue growth | 18.2% | -5.0% | -6.3% | -5.9% | 13.1% | |
| EBITDA growth | 46.4% | -0.1% | -124.1% | -594.8% | 21.4% | |
|
|---|
| Gross Margin | 44.0% | 46.2% | 47.6% | 53.0% | 56.0% | 3.0% |
| EBITDA Margin | 20.0% | 21.0% | -5.4% | 28.4% | 30.5% | 2.1% |
| SG&A, % of revenue | 23.6% | 24.7% | 23.7% | 22.3% | 23.7% | 1.4% |
| Net Income Margin | -11.8% | -15.2% | -41.8% | -16.2% | -19.7% | -3.5% |
| CAPEX, % of revenue | 24.0% | 17.5% | 14.9% | 12.7% | 12.1% | -0.7% |
|
|---|
| ROIC | -2.7% | -5.1% | -21.6% | 1.1% | 1.0% | -0.0% |
| ROE | -23.8% | -36.6% | | | | |
| Net Debt/EBITDA | 5.1x | 5.3x | | 6.5x | 6.9x | 0.5x |
Internap Corporation ($INAP) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 74 | 82 | 83 | 78 | | 2.9% | 17.7% | 20.4% | 11.7% |
| EBITDA | 22 | 25 | 26 | 25 | | 20.4% | 46.4% | 18.3% | 6.8% |
| Net Income | -14 | -14 | -15 | -19 | | | | | |
Balance Sheet
|
|---|
| Cash | 16 | 15 | 12 | 18 | | 76.1% | -15.6% | -1.0% | 22.1% |
| Short Term Debt | 27 | 27 | 28 | 9 | | 141.9% | 116.5% | 124.8% | -46.5% |
| Long Term Debt | 640 | 636 | 668 | 678 | | 101.0% | 34.1% | 34.9% | 32.5% |
Ratios
|
|---|
| Gross Margin | 56.3% | 55.1% | 55.6% | 56.9% | | 6.6% | 1.8% | 0.8% | 2.5% |
| EBITDA Margin | 29.6% | 30.2% | 30.9% | 31.4% | | 4.3% | 5.9% | -0.6% | -1.5% |
| Net Income Margin | -18.9% | -17.0% | -18.2% | -24.8% | | -7.5% | 10.7% | -2.4% | -14.9% |
Peers in Internet Services & Infrastruc
Below you can find Internap Corporation benchmarking vs. other companies in Internet Services & Infrastruc 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 |
|---|
| 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. ($OKTA) | | | 109.5% | 86.6% | 60.0% |
| |
|---|
| Median (15 companies) | 25.5% | 13.9% | 15.8% | 13.7% | 19.2% |
|---|
| Internap Corporation ($INAP) | | -5.0% | -6.3% | -5.9% | 13.1% |
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. ($CARB) | 68.5% | 71.6% | 70.6% | 70.7% | 71.2% |
| |
|---|
| Median (15 companies) | 53.1% | 55.4% | 61.5% | 65.0% | 66.4% |
|---|
| Internap Corporation ($INAP) | 44.0% | 46.2% | 47.6% | 53.0% | 56.0% |
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% |
| 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% |
| 21Vianet Group, Inc. ($VNET) | 10.9% | 8.3% | -4.8% | -20.7% | 25.6% |
| |
|---|
| Median (15 companies) | 4.5% | 1.3% | -2.8% | -7.1% | 14.4% |
|---|
| Internap Corporation ($INAP) | 20.0% | 21.0% | -5.4% | 28.4% | 30.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Akamai Technologies, Inc. ($AKAM) | 16.2% | 20.2% | 13.5% | 16.7% | 14.9% |
| 21Vianet Group, Inc. ($VNET) | 32.6% | 29.0% | 15.8% | 11.7% | 12.8% |
| 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. ($CARB) | 11.8% | 7.1% | 3.2% | 7.2% | 4.4% |
| |
|---|
| Median (15 companies) | 3.9% | 3.8% | 3.3% | 3.8% | 3.0% |
|---|
| Internap Corporation ($INAP) | 24.0% | 17.5% | 14.9% | 12.7% | 12.1% |
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. ($GDDY) | -3.3% | -1.7% | 2.9% | 2.7% | 4.6% |
| |
|---|
| Median (16 companies) | -2.7% | -6.1% | -11.3% | -14.6% | 1.4% |
|---|
| Internap Corporation ($INAP) | -2.7% | -5.1% | -21.6% | 1.1% | 1.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| GTT Communications, Inc. ($GTT) | 3.1x | 7.4x | 6.8x | 7.2x | 12.7x |
| Endurance International Group Holdings, Inc. ($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 |
| 21Vianet Group, Inc. ($VNET) | 10.7x | 5.6x | | | 1.0x |
| |
|---|
| Median (9 companies) | 2.5x | 2.5x | 2.2x | 2.6x | 1.0x |
|---|
| Internap Corporation ($INAP) | 5.1x | 5.3x | | 6.5x | 6.9x |
