MER Telemanagement Solutions Ltd. revenue decline decelerated from 51.8% in 2017 to 13.5% in 2018
04/08/2019 • About MER Telemanagement Solutions Ltd. (
$MTSL) • By InTwits
MER Telemanagement Solutions Ltd. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- MER Telemanagement Solutions Ltd. is a company in decline: 2018 revenue growth was -13.5%, 5 years revenue CAGR was -14.0%
- The company operates at negative EBITDA Margin: -12.6%
- MER Telemanagement Solutions Ltd. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 was 0.0% while average EBITDA Margin was -22.2% for the sames years
- MER Telemanagement Solutions Ltd. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.8%. At the same time it's a lot of higher than industry average of 30.9%.
- CAPEX is quite volatile: $0m in 2018, $0m in 2017, $2m in 2016, $3m in 2015, $0m in 2014
- The company has unprofitable business model: ROIC is -38.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue dropped on 13.5%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 7.8 pp from -4.8% to -12.6% in 2018.
Gross Margin decreased on 6.3 pp from 69.6% to 63.3% in 2018. SG&A as a % of Revenue jumped on 11.7 pp from 51.6% to 63.3% in 2018. During 2014-2018 SG&A as a % of Revenue bottomed in 2015 at 38.6% and was growing since that time.
Net Income margin increased on 6.1 pp from -26.1% to -20.0% in 2018. During the last 5 years Net Income margin bottomed in 2016 at -37.2% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In 2018 MER Telemanagement Solutions Ltd. had CAPEX/Revenue of 0.24%. CAPEX/Revenue dropped on 18.7 pp from 18.9% in 2015 to 0.24% in 2018. It's average level of CAPEX/Revenue for the last three years was 4.9%. During 2014-2018 CAPEX as a % of Revenue topped in 2015 at 18.9% and was declining since that time.
Return on investment
The company operates at negative ROIC (-38.9%) and ROE (-57.0%). ROIC decreased on 7.2 pp from -31.8% to -38.9% in 2018. ROE surged on 42.0 pp from -99.0% to -57.0% in 2018. During 2014-2018 ROE bottomed in 2016 at -130% and was growing since that time.
Leverage (Debt)
The company has no debt. Cash decreased slightly on 1.3%.
Financial and operational results
FY ended 12/31/2018
MER Telemanagement Solutions Ltd. ($MTSL) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 7.066 | 14.712 | 14.052 | 6.773 | 5.861 | -13.5% |
| Gross Profit | 4.173 | 6.298 | 7.139 | 4.715 | 3.712 | -21.3% |
| SG&A | 4.327 | 5.684 | 5.815 | 3.495 | 3.710 | 6.2% |
| EBITDA | -1.257 | -3.837 | -4.578 | -0.327 | -0.741 | |
| Net Income | -1.610 | -4.739 | -5.221 | -1.768 | -1.170 | |
Balance Sheet
|
|---|
| Cash | 4.864 | 3.444 | 1.508 | 1.165 | 1.150 | -1.3% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 0.041 | 2.783 | 1.909 | 0.050 | 0.014 | -72.0% |
Ratios
|
|---|
| Revenue growth | -43.3% | 108.2% | -4.5% | -51.8% | -13.5% | |
| EBITDA growth | -162.1% | 205.3% | 19.3% | -92.9% | 126.6% | |
|
|---|
| Gross Margin | 59.1% | 42.8% | 50.8% | 69.6% | 63.3% | -6.3% |
| EBITDA Margin | -17.8% | -26.1% | -32.6% | -4.8% | -12.6% | -7.8% |
| SG&A, % of revenue | 61.2% | 38.6% | 41.4% | 51.6% | 63.3% | 11.7% |
| Net Income Margin | -22.8% | -32.2% | -37.2% | -26.1% | -20.0% | 6.1% |
| CAPEX, % of revenue | 0.6% | 18.9% | 13.6% | 0.7% | 0.2% | -0.5% |
|
|---|
| ROIC | -24.0% | -75.7% | -147.3% | -31.8% | -38.9% | -7.2% |
| ROE | -25.2% | -80.5% | -130.4% | -99.0% | -57.0% | 42.0% |
Peers in Application Software
Below you can find MER Telemanagement Solutions Ltd. 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 ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (152 companies) | | 13.5% | 14.3% | 15.7% | 15.2% |
|---|
| MER Telemanagement Solutions Ltd. ($MTSL) | | 108.2% | -4.5% | -51.8% | -13.5% |
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. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (151 companies) | 63.4% | 61.9% | 64.2% | 64.4% | 66.0% |
|---|
| MER Telemanagement Solutions Ltd. ($MTSL) | 59.1% | 42.8% | 50.8% | 69.6% | 63.3% |
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. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (153 companies) | -10.1% | -9.4% | -4.7% | -3.3% | -3.3% |
|---|
| MER Telemanagement Solutions Ltd. ($MTSL) | -17.8% | -26.1% | -32.6% | -4.8% | -12.6% |
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. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (154 companies) | 2.8% | 2.7% | 2.9% | 2.3% | 2.4% |
|---|
| MER Telemanagement Solutions Ltd. ($MTSL) | 0.6% | 18.9% | 13.6% | 0.7% | 0.2% |
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. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (180 companies) | -14.2% | -11.2% | -9.2% | -10.2% | -9.8% |
|---|
| MER Telemanagement Solutions Ltd. ($MTSL) | -24.0% | -75.7% | -147.3% | -31.8% | -38.9% |
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 |
|---|
