Infinite Group Inc revenue decline decelerated from 10.0% in 2017 to 0.26% in 2018
07/03/2019 • About Infinite Group Inc (
$IMCI) • By InTwits
Infinite Group Inc reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Infinite Group Inc motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 was 0.0% while average EBITDA Margin was -1.1% for the sames years
- Infinite Group Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.1%.
- It operates with high leverage: Net Debt/EBITDA is 10.5x while industry average is -0.4x
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 showed almost no change in 2018. Annual revenue decline showed slowdown in 18Q4 - revenue increased on 7.3%. During 2014-2018 Revenue growth bottomed in 2016 at -10.7% and was accelerating since that time. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 7.7 pp from -4.0% to 3.7% in 2018.
Gross Margin increased on 4.3 pp from 30.5% to 34.7% in 2018. Gross Margin grew at 2.4 pp per annum in 2014-2018. SG&A as a % of Revenue decreased on 5.3 pp from 36.7% to 31.4% in 2018. During 2014-2018 SG&A as a % of Revenue topped in 2017 at 36.7%.
Net Income margin increased slightly on 1.8 pp from -1.2% to 0.58% in 2018. During the last 5 years Net Income margin bottomed in 2015 at -10.2% and was growing since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 0.0086% in 2018. Infinite Group Inc showed almost no change in CAPEX/Revenue from 2015 to 2018. Average CAPEX/Revenue for the last three years was 0.072%.
Leverage (Debt)
Debt level is 10.5x Net Debt / EBITDA and 10.6x Debt / EBITDA. Net Debt / EBITDA surged10.5x from to 10.5x in 2018. Debt showed almost no change in 2018 while cash dropped on 59.7%.
Infinite Group Inc has short term refinancing risk: cash is only 2.8% of short term debt.
Valuation and dividends
The company's trades at EV/EBITDA 13.4x and P/E 18.4x.
Financial and operational results
FY ended 12/31/2018
Infinite Group Inc ($IMCI) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 8.568 | 7.946 | 7.096 | 6.387 | 6.370 | -0.3% |
| Gross Profit | 2.182 | 1.951 | 2.090 | 1.946 | 2.212 | 13.7% |
| SG&A | 0.931 | 2.406 | 2.165 | 2.344 | 2.002 | -14.6% |
| EBITDA | -0.025 | -0.386 | 0.017 | -0.256 | 0.234 | |
| Net Income | -0.498 | -0.811 | -0.325 | -0.075 | 0.037 | |
Balance Sheet
|
|---|
| Cash | 0.008 | 0.014 | 0.042 | 0.074 | 0.030 | -59.7% |
| Short Term Debt | 0.182 | 0.471 | 1.205 | 1.078 | 1.053 | -2.3% |
| Long Term Debt | 2.174 | 2.034 | 1.685 | 1.396 | 1.422 | 1.9% |
Cash flow
|
|---|
| Capex | 0.039 | 0.004 | 0.008 | 0.006 | 0.001 | -90.3% |
Ratios
|
|---|
| Revenue growth | -1.7% | -7.3% | -10.7% | -10.0% | -0.3% | |
| EBITDA growth | -105.5% | 1,434.6% | -104.3% | -1,622.9% | -191.5% | |
|
|---|
| Gross Margin | 25.5% | 24.6% | 29.5% | 30.5% | 34.7% | 4.3% |
| EBITDA Margin | -0.3% | -4.9% | 0.2% | -4.0% | 3.7% | 7.7% |
| SG&A, % of revenue | 10.9% | 30.3% | 30.5% | 36.7% | 31.4% | -5.3% |
| Net Income Margin | -5.8% | -10.2% | -4.6% | -1.2% | 0.6% | 1.8% |
| CAPEX, % of revenue | 0.5% | 0.0% | 0.1% | 0.1% | 0.0% | -0.1% |
|
|---|
| Net Debt/EBITDA | | | 169.6x | | 10.5x |
Infinite Group Inc ($IMCI) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 2 | 2 | 2 | 2 | | -3.2% | -4.1% | -1.0% | 7.3% |
| EBITDA | -0 | 0 | 0 | 0 | | | | | 328.1% |
| Net Income | -0 | -0 | 0 | 0 | | | | | -70.0% |
Balance Sheet
|
|---|
| Cash | 0 | 0 | 0 | 0 | | -40.8% | -25.5% | -74.2% | -59.7% |
| Short Term Debt | 1 | 1 | 1 | 1 | | -26.5% | -27.8% | -35.6% | -2.3% |
| Long Term Debt | 1 | 1 | 1 | 1 | | -0.1% | -0.4% | 9.9% | 1.9% |
Ratios
|
|---|
| Gross Margin | 32.3% | 34.8% | 36.0% | 35.8% | | 3.3% | 4.6% | 7.4% | 1.6% |
| EBITDA Margin | -1.2% | 1.9% | 5.5% | 8.1% | | 4.9% | 8.2% | 11.2% | 6.1% |
| Net Income Margin | -5.5% | -2.9% | 1.0% | 8.9% | | 6.4% | 9.6% | 12.9% | -22.8% |
Peers in IT Consulting & Other Services
Below we provide Infinite Group Inc benchmarking against other companies in IT Consulting & Other Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
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 ($CTG) | | -6.0% | -12.1% | -7.3% | 19.1% |
| |
|---|
| Median (35 companies) | | 3.5% | 8.3% | 4.0% | 3.9% |
|---|
| Infinite Group Inc ($IMCI) | | -7.3% | -10.7% | -10.0% | -0.3% |
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 ($BAH) | 50.4% | 50.8% | 52.3% | 53.6% | 53.5% |
| |
|---|
| Median (37 companies) | 27.1% | 32.4% | 28.1% | 27.7% | 28.9% |
|---|
| Infinite Group Inc ($IMCI) | 25.5% | 24.6% | 29.5% | 30.5% | 34.7% |
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 ($DXC) | | | | 8.0% | 16.3% |
| |
|---|
| Median (36 companies) | 5.1% | 3.5% | 6.7% | 7.0% | 7.6% |
|---|
| Infinite Group Inc ($IMCI) | -0.3% | -4.9% | 0.2% | -4.0% | 3.7% |
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. ($SREV) | 3.4% | 4.7% | 10.4% | 7.2% | 6.5% |
| |
|---|
| Median (35 companies) | 1.0% | 0.9% | 1.2% | 1.4% | 1.5% |
|---|
| Infinite Group Inc ($IMCI) | 0.5% | 0.0% | 0.1% | 0.1% | 0.0% |
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. ($EPAM) | 19.7% | 18.4% | 18.2% | 18.9% | 21.2% |
| |
|---|
| Median (44 companies) | 6.9% | 5.8% | 7.4% | 4.7% | 6.9% |
|---|
| Infinite Group Inc ($IMCI) | | | | | |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| 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 |
| SCIENCE APPLICATIONS INTERNATIONAL CORPORATION ($SAIC) | 1.3x | 0.7x | 3.0x | 2.6x | 2.9x |
| |
|---|
| Median (28 companies) | -0.2x | -0.3x | 0.0x | 0.6x | 0.4x |
|---|
| Infinite Group Inc ($IMCI) | | | 169.6x | | 10.5x |
