WidePoint Corporation revenue returned to growth in 2018: increased 10.3% vs. 3.2% decline a year earliner
03/21/2019 • About WidePoint Corporation (
$WYY) • By InTwits
WidePoint Corporation reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- WidePoint Corporation is a growth stock: 2018 revenue growth was 10.3%, 5 year revenue CAGR was 12.3% at 2018 ROIC -0.75%
- EBITDA Margin is expanding: 1.3% in 2018 vs. -2.6% in 2017 vs. -5.3% in 2014
- WidePoint Corporation motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 was 0.0% while average EBITDA Margin was -2.8% for the sames years
- WidePoint Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.5%.
- The company has unprofitable business model: ROIC is -0.7%
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 jumped on 10.3%. Revenue growth showed acceleration in 18Q4 - it increased 24.3% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 3.9 pp from -2.6% to 1.3% in 2018. EBITDA Margin stuck to a growing trend at 1.6 pp per annum in the last 5 years.
Gross Margin showed almost no change in 2018. During the last 5 years Gross Margin bottomed in 2016 at 17.9% and was growing since that time. SG&A as a % of Revenue decreased on 3.9 pp from 21.9% to 18.0% in 2018. SG&A as a % of Revenue stuck to a declining trend at -3.4 pp per annum in the last 5 years.
Net Income margin increased on 2.9 pp from -4.7% to -1.7% in 2018. Net Income margin followed a growing trend at 3.1 pp per annum in 2014-2018.
Investments (CAPEX, working capital and M&A)
In 2018 WidePoint Corporation had CAPEX/Revenue of 0.31%. WidePoint Corporation showed almost no change in CAPEX/Revenue from 2015 to 2018. It's average level of CAPEX/Revenue for the last three years was 0.53%.
Return on investment
The company operates at negative ROIC (-0.7%) and ROE (-5.9%). ROIC jumped on 12.4 pp from -13.1% to -0.75% in 2018. ROE increased on 7.3 pp from -13.2% to -5.9% in 2018. During the last 5 years ROIC bottomed in 2015 at -15.1% and was growing since that time. ROE grew at 4.8 pp per annum in 2014-2018.
Leverage (Debt)
Debt level is -1.7x Net Debt / EBITDA and 0.4x Debt / EBITDA. Debt decreased on 7.7% while cash dropped on 53.9%.
WidePoint Corporation has no short term refinancing risk: cash is higher than short term debt (811.7%).
Management team
Jin Kang is a the company's CEO. Jin Kang is a founder and has spent 2 years with the company.
Financial and operational results
FY ended 12/31/2018
WidePoint Corporation ($WYY) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 53.316 | 70.838 | 78.421 | 75.884 | 83.679 | 10.3% |
| Gross Profit | 13.514 | 13.233 | 14.010 | 13.690 | 15.270 | 11.5% |
| SG&A | 17.789 | 17.638 | 17.116 | 16.596 | 15.045 | -9.3% |
| EBITDA | -2.805 | -3.896 | -2.600 | -1.970 | 1.117 | |
| Net Income | -8.401 | -5.467 | -4.134 | -3.534 | -1.456 | |
Balance Sheet
|
|---|
| Cash | 13.155 | 7.930 | 9.123 | 5.272 | 2.432 | -53.9% |
| Short Term Debt | 2.398 | 1.054 | 0.231 | 0.305 | 0.300 | -1.7% |
| Long Term Debt | 1.364 | 0.444 | 0.412 | 0.232 | 0.196 | -15.6% |
Cash flow
|
|---|
| Capex | 0.263 | 0.414 | 0.275 | 0.696 | 0.262 | -62.4% |
Ratios
|
|---|
| Revenue growth | 13.9% | 32.9% | 10.7% | -3.2% | 10.3% | |
| EBITDA growth | -586.9% | 38.9% | -33.3% | -24.2% | -156.7% | |
|
|---|
| Gross Margin | 25.3% | 18.7% | 17.9% | 18.0% | 18.2% | 0.2% |
| EBITDA Margin | -5.3% | -5.5% | -3.3% | -2.6% | 1.3% | 3.9% |
| SG&A, % of revenue | 33.4% | 24.9% | 21.8% | 21.9% | 18.0% | -3.9% |
| Net Income Margin | -15.8% | -7.7% | -5.3% | -4.7% | -1.7% | 2.9% |
| CAPEX, % of revenue | 0.5% | 0.6% | 0.4% | 0.9% | 0.3% | -0.6% |
|
|---|
| ROIC | -14.1% | -15.1% | -14.3% | -13.1% | -0.7% | 12.4% |
| ROE | -28.3% | -15.9% | -13.7% | -13.2% | -5.9% | 7.3% |
| Net Debt/EBITDA | | | | | -1.7x |
WidePoint Corporation ($WYY) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 20 | 18 | 21 | 25 | | 7.9% | -7.1% | 15.3% | 24.3% |
| EBITDA | -0 | -0 | 0 | 1 | | | | 176.4% | |
| Net Income | -0 | -0 | -0 | -0 | | | | | |
Balance Sheet
|
|---|
| Cash | 7 | 5 | 4 | 2 | | 5.8% | -2.0% | -38.5% | -53.9% |
| Short Term Debt | 0 | 0 | 0 | 0 | | 110.8% | 560.6% | -66.0% | -1.7% |
| Long Term Debt | 0 | 0 | 0 | 0 | | -55.3% | 310.3% | 280.3% | -15.6% |
Ratios
|
|---|
| Gross Margin | 17.7% | 20.2% | 17.3% | 18.1% | | -0.7% | 2.8% | -1.0% | 0.1% |
| EBITDA Margin | -0.2% | -0.4% | 1.4% | 3.8% | | 4.2% | 4.3% | 0.8% | 5.6% |
| Net Income Margin | -2.3% | -2.7% | -0.5% | -1.7% | | 3.9% | 4.2% | 1.2% | 2.2% |
Peers in IT Consulting & Other Services
Below you can find WidePoint Corporation benchmarking vs. other companies in IT Consulting & Other Services 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 |
|---|
| Gopher Protocol Inc ($GOPH) | | -25.0% | 83.3% | 5,471.1% | 461.0% |
| CLPS Incorporation ($CLPS) | | | | 8.1% | 56.0% |
| EPAM Systems, Inc. ($EPAM) | | 25.2% | 26.9% | 25.0% | 27.1% |
| Gartner, Inc. ($IT) | | 7.0% | 13.0% | 35.5% | 20.1% |
| Computer Task Group, Incorporated ($CTG) | | -6.0% | -12.1% | -7.3% | 19.1% |
| |
|---|
| Median (35 companies) | | 3.3% | 7.7% | 4.0% | 3.4% |
|---|
| WidePoint Corporation ($WYY) | | 32.9% | 10.7% | -3.2% | 10.3% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Inpixon ($INPX) | 29.8% | 28.9% | 28.1% | 68.7% | 71.4% |
| Gartner, Inc. ($IT) | 60.5% | 61.2% | 61.3% | 60.1% | 63.1% |
| InterXion Holding N.V. ($INXN) | 59.2% | 60.8% | 61.5% | 61.1% | 60.9% |
| LiveRamp Holdings, Inc. ($RAMP) | 25.1% | 38.6% | 42.5% | 45.7% | 56.2% |
| Booz Allen Hamilton Holding Corporation ($BAH) | 50.4% | 50.8% | 52.3% | 53.6% | 53.5% |
| |
|---|
| Median (37 companies) | 27.1% | 32.4% | 29.5% | 30.0% | 29.9% |
|---|
| WidePoint Corporation ($WYY) | 25.3% | 18.7% | 17.9% | 18.0% | 18.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InterXion Holding N.V. ($INXN) | 41.3% | 44.9% | 43.3% | 42.2% | 42.8% |
| Switch, Inc. ($SWCH) | | 50.7% | 37.0% | 28.5% | 39.8% |
| Cognizant Technology Solutions Corporation ($CTSH) | 20.4% | 19.9% | 19.8% | 19.7% | 20.5% |
| Taoping Inc. ($TAOP) | -54.0% | -237.5% | -117.7% | 13.2% | 18.7% |
| DXC Technology Company ($DXC) | | | | 8.0% | 16.3% |
| |
|---|
| Median (36 companies) | 5.1% | 3.5% | 6.7% | 7.0% | 7.6% |
|---|
| WidePoint Corporation ($WYY) | -5.3% | -5.5% | -3.3% | -2.6% | 1.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InterXion Holding N.V. ($INXN) | 62.5% | 48.1% | 57.4% | 50.5% | 78.3% |
| Switch, Inc. ($SWCH) | | 71.5% | 90.2% | 106.4% | 67.9% |
| Taoping Inc. ($TAOP) | 1.4% | 29.2% | 34.0% | 20.8% | 8.7% |
| Teradata Corporation ($TDC) | 2.0% | 2.1% | 2.3% | 3.6% | 7.1% |
| ServiceSource International, Inc. ($SREV) | 3.4% | 4.7% | 10.4% | 7.2% | 6.5% |
| |
|---|
| Median (35 companies) | 1.0% | 0.9% | 1.2% | 1.4% | 1.5% |
|---|
| WidePoint Corporation ($WYY) | 0.5% | 0.6% | 0.4% | 0.9% | 0.3% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Accenture plc ($ACN) | 80.5% | 81.0% | 81.3% | 61.7% | 66.1% |
| The Hackett Group, Inc. ($HCKT) | 11.2% | 19.5% | 31.7% | 23.8% | 24.6% |
| Cognizant Technology Solutions Corporation ($CTSH) | 24.7% | 22.0% | 21.3% | 21.9% | 23.8% |
| Booz Allen Hamilton Holding Corporation ($BAH) | 25.3% | 26.5% | 23.1% | 22.6% | 22.5% |
| EPAM Systems, Inc. ($EPAM) | 19.7% | 18.4% | 18.2% | 18.9% | 21.2% |
| |
|---|
| Median (44 companies) | 7.5% | 6.9% | 7.7% | 5.6% | 6.9% |
|---|
| WidePoint Corporation ($WYY) | -14.1% | -15.1% | -14.3% | -13.1% | -0.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Infinite Group Inc ($IMCI) | | | 169.6x | | 10.5x |
| InterXion Holding N.V. ($INXN) | 3.3x | 2.9x | 3.4x | 3.8x | 4.6x |
| Gartner, Inc. ($IT) | 0.1x | 1.3x | 0.6x | 11.7x | 4.1x |
| Switch, Inc. ($SWCH) | | 2.2x | 4.0x | 3.2x | 3.3x |
| Presidio, Inc. ($PSDO) | 0.0x | | 5.6x | 3.6x | 3.1x |
| |
|---|
| Median (28 companies) | -0.2x | -0.3x | 0.2x | 0.6x | 1.0x |
|---|
| WidePoint Corporation ($WYY) | | | | | -1.7x |
