Evolving Systems, Inc. Net Income dropped on 688% while Revenue increased on 6.3%
04/04/2019 • About Evolving Systems, Inc. (
$EVOL) • By InTwits
Evolving Systems, 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: -48.7% in 2018, 22.6% in 2017, 26.8% in 2016, 19.2% in 2015, 30.4% in 2014
- Evolving Systems, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.8%.
- The company has unprofitable business model: ROIC is -45.5%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.8x 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
The company's Revenue increased on 6.3%. Revenue growth showed slowdown in 18Q4 - it was -24.5% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 358 pp from -332% to 25.5% in 2018.
Gross Margin decreased on 3.7 pp from 69.9% to 66.2% in 2018. During 2014-2018 Gross Margin topped in 2016 at 78.6% and was declining since that time. SG&A as a % of Revenue increased on 4.2 pp from 39.1% to 43.3% in 2018. SG&A as a % of Revenue stuck to a growing trend at 2.4 pp per annum in the last 5 years.
Net Income margin dropped on 57.0 pp from 8.7% to -48.3% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 Evolving Systems, Inc. had CAPEX/Revenue of 0.60%. Evolving Systems, Inc. showed almost no change in CAPEX/Revenue from 2015 to 2018. It's average level of CAPEX/Revenue for the last three years was 0.38%. During the last 5 years CAPEX as a % of Revenue bottomed in 2016 at 0.25% and was growing since that time.
Return on investment
The company operates at negative ROIC (-45.5%) and ROE (-56.0%). ROIC dropped on 58.8 pp from 13.3% to -45.5% in 2018. ROE dropped on 63.9 pp from 7.9% to -56.0% in 2018.
Leverage (Debt)
Debt level is 0.8x Net Debt / EBITDA and Debt / EBITDA. Debt dropped on 32.1% while cash dropped on 11.0%.
Evolving Systems, Inc. has no short term refinancing risk: cash is higher than short term debt (188.4%).
Management team
Matthew Stecker is a Evolving Systems, Inc.'s CEO. Matthew Stecker is a founder and has spent 1 year with the company.
Financial and operational results
FY ended 12/31/2018
Evolving Systems, Inc. ($EVOL) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 29.680 | 25.576 | 24.778 | 28.812 | 30.636 | 6.3% |
| Gross Profit | 22.032 | 19.127 | 19.481 | 20.132 | 20.287 | 0.8% |
| SG&A | 9.372 | 9.847 | 8.820 | 11.279 | 13.269 | 17.6% |
| EBITDA | 9.017 | 4.900 | 6.637 | 6.525 | -14.912 | -328.5% |
| Net Income | 5.608 | 3.296 | 3.435 | 2.516 | -14.787 | -687.7% |
Balance Sheet
|
|---|
| Cash | 9.781 | 8.400 | 7.614 | 7.562 | 6.732 | -11.0% |
| Short Term Debt | 0.005 | 10.005 | 1.998 | 2.805 | 3.573 | 27.4% |
| Long Term Debt | 0.007 | 0.001 | 4.000 | 5.942 | 2.365 | -60.2% |
Cash flow
|
|---|
| Capex | 0.588 | 0.198 | 0.061 | 0.080 | 0.185 | 131.3% |
Ratios
|
|---|
| Revenue growth | 18.3% | -13.8% | -3.1% | 16.3% | 6.3% | |
| EBITDA growth | 51.2% | -45.7% | 35.4% | -1.7% | -328.5% | |
|
|---|
| Gross Margin | 74.2% | 74.8% | 78.6% | 69.9% | 66.2% | -3.7% |
| EBITDA Margin | 30.4% | 19.2% | 26.8% | 22.6% | -48.7% | -71.3% |
| SG&A, % of revenue | 31.6% | 38.5% | 35.6% | 39.1% | 43.3% | 4.2% |
| Net Income Margin | 18.9% | 12.9% | 13.9% | 8.7% | -48.3% | -57.0% |
| CAPEX, % of revenue | 2.0% | 0.8% | 0.2% | 0.3% | 0.6% | 0.3% |
|
|---|
| ROIC | 25.5% | 11.1% | 14.2% | 13.3% | -45.5% | -58.8% |
| ROE | 16.8% | 10.0% | 11.2% | 7.9% | -56.0% | -63.9% |
| Net Debt/EBITDA | -1.1x | 0.3x | -0.2x | 0.2x | |
Evolving Systems, Inc. ($EVOL) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 8 | 8 | 7 | 7 | | 38.9% | 30.8% | -1.7% | -24.5% |
| EBITDA | 1 | 1 | 1 | -17 | | -41.0% | -74.7% | -45.3% | -1,507.6% |
| Net Income | 0 | 0 | 1 | -16 | | -50.3% | -85.7% | -27.7% | |
Balance Sheet
|
|---|
| Cash | 9 | 9 | 9 | 7 | | 15.5% | 68.5% | 12.5% | -11.0% |
| Short Term Debt | 3 | 4 | 4 | 4 | | 60.5% | 79.9% | 48.9% | 27.4% |
| Long Term Debt | 5 | 4 | 3 | 2 | | 44.3% | 38.5% | -51.6% | -60.2% |
Ratios
|
|---|
| Gross Margin | 65.0% | 64.5% | 68.2% | 67.6% | | -8.7% | -10.4% | 2.3% | 0.3% |
| EBITDA Margin | 13.1% | 6.2% | 11.0% | -249.9% | | -17.8% | -25.8% | -8.8% | -263.3% |
| Net Income Margin | 5.9% | 1.9% | 7.4% | -230.8% | | -10.6% | -15.8% | -2.7% | -227.3% |
Peers in Application Software
Below you can find Evolving Systems, 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% |
| 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 ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 14.0% | 14.3% | 14.8% | 15.2% |
|---|
| Evolving Systems, Inc. ($EVOL) | | -13.8% | -3.1% | 16.3% | 6.3% |
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. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 62.8% | 61.7% | 63.8% | 64.4% | 65.7% |
|---|
| Evolving Systems, Inc. ($EVOL) | 74.2% | 74.8% | 78.6% | 69.9% | 66.2% |
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. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.3% | -10.7% | -5.3% | -4.2% | -3.2% |
|---|
| Evolving Systems, Inc. ($EVOL) | 30.4% | 19.2% | 26.8% | 22.6% | -48.7% |
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. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 3.0% | 2.3% | 2.4% |
|---|
| Evolving Systems, Inc. ($EVOL) | 2.0% | 0.8% | 0.2% | 0.3% | 0.6% |
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. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.4% | -13.1% | -9.8% | -11.8% | -9.3% |
|---|
| Evolving Systems, Inc. ($EVOL) | 25.5% | 11.1% | 14.2% | 13.3% | -45.5% |
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 | -0.9x | -0.7x |
|---|
