Research Solutions Inc/CA revenue growth decelerated from 8.8% in FY2018 to 2.8% in FY2019
09/19/2019 • About Research Solutions Inc/CA (
$RSSS) • By InTwits
Research Solutions Inc/CA reported FY2019 financial results today. Overall the company's long term financial model is characterised by the following facts:
- The company operates at negative EBITDA Margin: -3.7%
- Research Solutions Inc/CA motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2015-FY2019 was 0.0% while average EBITDA Margin was -4.2% for the sames years
- Research Solutions Inc/CA has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.2%.
- The company has unprofitable business model: ROIC is -34.7%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.9x while industry average is -0.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Research Solutions Inc/CA's Revenue increased on 2.8%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 2.1 pp from 10.4% to 8.3% in FY2019.
Gross Margin increased on 2.7 pp from 26.2% to 29.0% in FY2019. Gross Margin followed a growing trend at 2.7 pp per annum in the last 5 years. SG&A as a % of Revenue increased slightly on 0.55 pp from 32.6% to 33.2% in FY2019.
Net Income margin increased on 2.7 pp from -6.0% to -3.3% in FY2019. During FY2015-FY2019 Net Income margin bottomed in FY2017 at -8.9% and was growing since that time.
Investments (CAPEX, working capital and M&A)
Research Solutions Inc/CA's CAPEX/Revenue was 0.055% in FY2019. Research Solutions Inc/CA showed almost no change in CAPEX/Revenue from FY2016 to FY2019. For the last three years the average CAPEX/Revenue was 0.13%.
Return on investment
The company operates at negative ROIC (-34.7%) and ROE (-30.4%). ROIC jumped on 10.5 pp from -45.2% to -34.7% in FY2019. ROE jumped on 13.6 pp from -44.0% to -30.4% in FY2019.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.9x and Debt / EBITDA is . Debt dropped on 36.5% while cash increased on 9.1%.
Research Solutions Inc/CA has no short term refinancing risk: cash is higher than short term debt (4,143.7%).
Financial and operational results
FY ended 06/30/2019
Research Solutions Inc/CA ($RSSS) key annual financial indicators| mln. $ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 31.900 | 34.364 | 25.747 | 28.018 | 28.794 | 2.8% |
| Gross Profit | 6.176 | 6.501 | 6.104 | 7.349 | 8.343 | 13.5% |
| SG&A | 6.496 | 6.831 | 9.055 | 9.147 | 9.560 | 4.5% |
| EBITDA | -0.320 | -0.330 | -2.906 | -1.687 | -1.071 | |
| Net Income | 0.774 | -0.498 | -2.294 | -1.679 | -0.960 | |
Balance Sheet
|
|---|
| Cash | 1.354 | 6.077 | 5.774 | 4.908 | 5.353 | 9.1% |
| Short Term Debt | 0.000 | 0.000 | 0.111 | 0.120 | 0.129 | 7.8% |
| Long Term Debt | 0.000 | 0.000 | 0.328 | 0.209 | 0.079 | -62.0% |
Cash flow
|
|---|
| Capex | 0.068 | 0.058 | 0.060 | 0.029 | 0.016 | -46.0% |
Ratios
|
|---|
| Revenue growth | 12.0% | 7.7% | -25.1% | 8.8% | 2.8% | |
| EBITDA growth | -61.7% | 3.2% | 780.9% | -41.9% | -36.5% | |
|
|---|
| Gross Margin | 19.4% | 18.9% | 23.7% | 26.2% | 29.0% | 2.7% |
| EBITDA Margin | -1.0% | -1.0% | -11.3% | -6.0% | -3.7% | 2.3% |
| SG&A, % of revenue | 20.4% | 19.9% | 35.2% | 32.6% | 33.2% | 0.6% |
| Net Income Margin | 2.4% | -1.4% | -8.9% | -6.0% | -3.3% | 2.7% |
| CAPEX, % of revenue | 0.2% | 0.2% | 0.2% | 0.1% | 0.1% | -0.0% |
|
|---|
| ROIC | -124.7% | -11.6% | -56.1% | -45.2% | -34.7% | 10.5% |
| ROE | | -14.0% | -44.2% | -44.0% | -30.4% | 13.6% |
Peers in IT Consulting & Other Services
Below we provide Research Solutions Inc/CA 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 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Gopher Protocol Inc ($GOPH) | -25.0% | 83.3% | 5,471.1% | 461.0% | |
| CLPS Incorporation ($CLPS) | | | 8.1% | 56.0% | |
| Endava plc ($DAVA) | | | 38.1% | 36.5% | 32.3% |
| EPAM Systems, Inc. ($EPAM) | 25.2% | 26.9% | 25.0% | 27.1% | |
| Gartner, Inc. ($IT) | 7.0% | 13.0% | 35.5% | 20.1% | |
| |
|---|
| Median (36 companies) | 2.8% | 8.3% | 4.8% | 3.6% | 18.1% |
|---|
| Research Solutions Inc/CA ($RSSS) | | | -25.1% | 8.8% | 2.8% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Inpixon ($INPX) | 28.9% | 28.1% | 68.7% | 71.4% | |
| Gartner, Inc. ($IT) | 61.2% | 61.3% | 60.1% | 63.1% | |
| InterXion Holding N.V. ($INXN) | 60.8% | 61.5% | 61.1% | 60.9% | |
| LiveRamp Holdings, Inc. ($RAMP) | 38.6% | 42.5% | 45.7% | 56.2% | |
| Booz Allen Hamilton Holding Corporation ($BAH) | 50.8% | 52.3% | 53.6% | 53.5% | |
| |
|---|
| Median (38 companies) | 32.8% | 29.5% | 30.2% | 30.4% | 32.6% |
|---|
| Research Solutions Inc/CA ($RSSS) | | 18.9% | 23.7% | 26.2% | 29.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| InterXion Holding N.V. ($INXN) | 44.9% | 43.3% | 42.2% | 42.8% | |
| Switch, Inc. ($SWCH) | 50.7% | 37.0% | 28.5% | 39.8% | |
| Cognizant Technology Solutions Corporation ($CTSH) | 19.9% | 19.8% | 19.7% | 20.5% | |
| Taoping Inc. ($TAOP) | -237.5% | -117.7% | 13.2% | 18.7% | |
| DXC Technology Company ($DXC) | | | 8.0% | 16.3% | |
| |
|---|
| Median (37 companies) | 3.4% | 6.8% | 7.1% | 8.0% | 15.4% |
|---|
| Research Solutions Inc/CA ($RSSS) | | -1.0% | -11.3% | -6.0% | -3.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| InterXion Holding N.V. ($INXN) | 48.1% | 57.4% | 50.5% | 78.3% | |
| Switch, Inc. ($SWCH) | 71.5% | 90.2% | 106.4% | 67.9% | |
| Taoping Inc. ($TAOP) | 29.2% | 34.0% | 20.8% | 8.7% | |
| Teradata Corporation ($TDC) | 2.1% | 2.3% | 3.6% | 7.1% | |
| ServiceSource International, Inc. ($SREV) | 4.7% | 10.4% | 7.2% | 6.5% | |
| |
|---|
| Median (36 companies) | 0.9% | 1.2% | 1.4% | 1.5% | 2.0% |
|---|
| Research Solutions Inc/CA ($RSSS) | | 0.2% | 0.2% | 0.1% | 0.1% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Accenture plc ($ACN) | | 81.3% | 61.7% | 66.1% | 62.1% |
| Endava plc ($DAVA) | | | 36.0% | 29.6% | 26.1% |
| The Hackett Group, Inc. ($HCKT) | 19.5% | 31.7% | 23.8% | 24.6% | |
| Cognizant Technology Solutions Corporation ($CTSH) | 22.0% | 21.3% | 21.9% | 23.8% | |
| Booz Allen Hamilton Holding Corporation ($BAH) | 26.5% | 23.1% | 22.6% | 22.5% | |
| |
|---|
| Median (45 companies) | 5.8% | 7.7% | 6.4% | 7.0% | 44.1% |
|---|
| Research Solutions Inc/CA ($RSSS) | | -11.6% | -56.1% | -45.2% | -34.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Infinite Group Inc ($IMCI) | | 169.6x | | 10.5x | |
| InterXion Holding N.V. ($INXN) | 2.9x | 3.4x | 3.8x | 4.6x | |
| Gartner, Inc. ($IT) | 1.3x | 0.6x | 11.7x | 4.1x | |
| Switch, Inc. ($SWCH) | 2.2x | 4.0x | 3.2x | 3.3x | |
| Presidio, Inc. ($PSDO) | | 5.6x | 3.6x | 3.1x | |
| |
|---|
| Median (30 companies) | -0.2x | 0.1x | 0.4x | 0.5x | -1.3x |
|---|
