Seven Stars Cloud Group, Inc. reports 162% revenue growth in 2018 and almost no change in EBITDA Margin of -6.8%
04/01/2019 • About Seven Stars Cloud Group, Inc. (
$SSC) • By InTwits
Seven Stars Cloud Group, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Seven Stars Cloud Group, Inc. is a fast growth stock: 2018 revenue growth was 162%, 5 year revenue CAGR was 315% at 2018 ROIC -55.8%
- The company operates at negative EBITDA Margin: -6.8%
- Seven Stars Cloud Group, 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 -14.4%
- Seven Stars Cloud Group, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.4%. At the same time it's in pair with industry average of 13.3%
- CAPEX is quite volatile: $7m in 2018, $0m in 2017, $4m in 2016, $0m in 2015, $0m in 2014
- The company has unprofitable business model: ROIC is -55.8%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.1x while industry average is -2.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Seven Stars Cloud Group, Inc.'s Revenue surged on 162%. Revenue growth showed slowdown in 18Q4 - it was -59.8% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.4 pp from 1.1% to 2.5% in 2018. EBITDA Margin followed a growing trend at 106 pp per annum in the last 5 years.
Gross Margin decreased on 4.1 pp from 5.0% to 0.84% in 2018. SG&A as a % of Revenue decreased on 3.1 pp from 9.1% to 5.9% in 2018. SG&A as a % of Revenue stuck to a declining trend at -91.8 pp per annum in 2014-2018.
Net Income margin showed almost no change in 2018. Net Income margin pursued a growing trend in 2014-2018.
Investments (CAPEX, working capital and M&A)
In 2018 the company had CAPEX/Revenue of 1.8%. CAPEX/Revenue increased slightly on 1.0 pp from 0.76% in 2015 to 1.8% in 2018. Average CAPEX/Revenue for the last three years was 4.2%.
Return on investment
The company operates at negative ROIC (-55.8%) and ROE (-77.5%). ROIC dropped on 26.4 pp from -29.4% to -55.8% in 2018. ROE dropped on 35.3 pp from -42.1% to -77.5% in 2018.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.1x and Debt / EBITDA is . Net Debt / EBITDA didn't change in 2018. Debt jumped on 415% while cash dropped on 56.9%.
Seven Stars Cloud Group, Inc. has short term refinancing risk: cash is only 75.0% of short term debt.
Management team
Seven Stars Cloud Group, Inc.'s CEO is Alfred P Poor. Alfred P Poor is a founder and has 0 years tenure with the company.
Financial and operational results
FY ended 12/31/2018
Seven Stars Cloud Group, Inc. ($SSC) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 2.0 | 4.6 | 35.2 | 144.4 | 377.7 | 161.7% |
| Gross Profit | -0.8 | 0.9 | -0.4 | 7.2 | 3.2 | -55.8% |
| SG&A | 7.5 | 8.2 | 10.9 | 13.1 | 22.5 | 71.2% |
| EBITDA | -8.9 | -8.0 | -28.4 | -9.8 | -25.8 | |
| Net Income | -12.4 | -8.1 | -26.4 | -10.5 | -27.4 | |
Balance Sheet
|
|---|
| Cash | 10.8 | 3.8 | 3.8 | 7.2 | 3.1 | -56.9% |
| Short Term Debt | 3.0 | 3.0 | 3.0 | 3.0 | 4.1 | 38.0% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 11.3 | |
Cash flow
|
|---|
| Capex | 0.1 | 0.0 | 3.8 | 0.1 | 6.8 | 10,486.4% |
Ratios
|
|---|
| Revenue growth | 535.8% | 134.7% | 663.8% | 310.3% | 161.7% | |
| EBITDA growth | -12.2% | -10.0% | 253.9% | -65.5% | 164.0% | |
|
|---|
| Gross Margin | -40.4% | 20.2% | -1.0% | 5.0% | 0.8% | -4.1% |
| EBITDA Margin | -453.8% | -174.1% | -80.7% | -6.8% | -6.8% | -0.1% |
| SG&A, % of revenue | 380.1% | 178.8% | 31.0% | 9.1% | 5.9% | -3.1% |
| Net Income Margin | -632.2% | -175.9% | -75.1% | -7.3% | -7.3% | 0.0% |
| CAPEX, % of revenue | 3.4% | 0.8% | 10.9% | 0.0% | 1.8% | 1.7% |
|
|---|
| ROIC | -62.6% | -50.8% | -121.4% | -29.4% | -55.8% | -26.4% |
| ROE | | | | -42.1% | -77.5% | -35.3% |
Seven Stars Cloud Group, Inc. ($SSC) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 186 | 133 | 44 | 15 | | 460.6% | 206.9% | 44.6% | -59.8% |
| EBITDA | -4 | -9 | -6 | -7 | | -279.2% | | | |
| Net Income | -4 | -8 | -7 | -8 | | -268.2% | | | |
Balance Sheet
|
|---|
| Cash | 4 | 2 | 16 | 3 | | 265.6% | -43.9% | 856.0% | -56.9% |
| Short Term Debt | 3 | 3 | 3 | 4 | | 0.0% | 0.0% | 2.5% | 38.0% |
| Long Term Debt | 0 | 0 | 11 | 11 | | | | | |
Ratios
|
|---|
| Gross Margin | 0.2% | 1.2% | 2.0% | 2.5% | | -11.3% | 1.0% | -4.5% | -1.0% |
| EBITDA Margin | -2.2% | -6.4% | -13.9% | -47.2% | | -9.1% | 2.3% | -3.7% | -33.0% |
| Net Income Margin | -2.0% | -6.3% | -16.4% | -51.9% | | -8.7% | 2.5% | -6.4% | -35.9% |
Peers in Application Software
Below you can find Seven Stars Cloud Group, Inc. benchmarking vs. other companies in Application Software 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 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| AudioEye, Inc. ($AEYE) | | -35.2% | 193.4% | 175.5% | 106.6% |
| |
|---|
| Median (151 companies) | -43.3% | 13.5% | 13.6% | 14.8% | 15.2% |
|---|
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
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. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 63.4% | 61.9% | 64.2% | 64.6% | 66.1% |
|---|
| Seven Stars Cloud Group, Inc. ($SSC) | -40.4% | 20.2% | -1.0% | 5.0% | 0.8% |
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. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.1% | -9.4% | -4.7% | -3.3% | -3.2% |
|---|
| Seven Stars Cloud Group, Inc. ($SSC) | -453.8% | -174.1% | -80.7% | -6.8% | -6.8% |
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. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 2.9% | 2.3% | 2.4% |
|---|
| Seven Stars Cloud Group, Inc. ($SSC) | 3.4% | 0.8% | 10.9% | 0.0% | 1.8% |
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. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.2% | -11.2% | -9.2% | -10.2% | -9.3% |
|---|
| Seven Stars Cloud Group, Inc. ($SSC) | -62.6% | -50.8% | -121.4% | -29.4% | -55.8% |
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 (70 companies) | -1.4x | -1.0x | -0.9x | -0.8x | -0.7x |
|---|
